Petition — 28 East Jackson Enterprises, Inc. v. P. J. Cullerton, Individually and as Cook County Assessor, and Bernard J. Korzen, Individually and as Treasurer and Ex-Officio Collector of Cook County

No %5~755 *

Iu the

Supreme Court of the United Stites

2 ro ~~“ . oo « {

¢ PAICHAEL R oR. CLEEY fF

: }

1975

OctTosBer Term, 1975

-- —— —- ——_— — -—_serad

28 EAST JACKSON ENTERPRISES, INC.,

Petitioner,

vs.

P. J. CULLERTON, Individually and as Cook County

Assessor, and BERNARD J. KORZEN, Individually and

as Treasurer and Ex-Officio Collector of Cook County,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

James L. Fox

33 North Dearborn Street

Chicago, Illinois 60602

Attorney for Petitioner

Moszs, Grssons, ABraAMson & Fox

33 North Dearborn Street

Chicago, Illinois 60602

312-346-8370

Of Counsel

The Scheffer Press, Inc.—(312) 263-6850

INDEX

Se Oe Ge Be cai eiiciiniisetecicsicialaiiacdaitaceiniaians

POR Bh GOI isicicescsesisstciesileteineisinniserriaeict

I Th icisininiicisiniccnmsaieiiniaidibinizvatlaildiails

Constitutional and Statutory Provisions Involved ......

eS ET GNI iiicsnceisesccitensciscoenndevetennscinionennitiinnsions

Argument Supporting Reasons for Granting the Writ

I. The dismissal of the civil rights action for

damages conflicts with applicable decisions of

I SIT. cccccscntineniccadosadnniaditeiieinemietoiduanamaicien

II. The dismissal of plaintiff’s injunctive action

is contrary to the decision in Hillsborough v.

Cromaell, 326 U.S. 620 (1946) .0...........cccesccceeees

I ke ae

Appendix

Opinion of the United States Court of Appeals

for the Seventh Cireuit dated August 8, 1975

(Argued September 13, 1974; decided August 8,

TD, sicsnShsciecnade cinta liek katana asian dacs

Preliminary Injunction of the United States Dis-

trict Court for the Northern District of Illinois,

Eastern Division, dated January 23, 1974, in pro-

CE Wie Oe TR encctecincorecmaneinesdneeniencneiins

Opinion of the United States District Court for

the Northern District of Illinois, Eastern Divi-

sion, dated January 23, 1973, in related case

ee SD sencinsdclentaseicniataatsiiiiiadsiieninGuiaiamananiaanne

la

8a

li

Cases CITED

PAGE

Clarendon Associates v. Korzen, 56 Ill. 2d 95 ..17, 18, 19, 20

Edelman v. Jordan, 415 U.S. G51 .............ccccscscccsessreeeeees 10

Eisen v. Eastman, 421 F. 2d 560 (C.A.N.Y., 1969) .... 11

Exchange National Bank v. Cullerton, 17 Ill. App. 3d

EEE SEITE sccecioceuischasiementenedigeinaiehediniesiiensinentsianinadassmiiibaibetancisnnees 20

Goodyear v. Tierney, 411 Ill. 421, 427 (1952) ........ 15, 17, 19

Hillsborough v. Cromwell, 326 U.S. 620, 625, 626 ..14, 19, 22

Hodge v. Glaze, 22 Ill. 2d 294, 297 (1961) ...... 16

Hoyne Savings & Loan Association v. Hare, 60 Ill. 2d

uae COMMITTED sicilicsicalaissipieieedeab ilbebidtigiitabibdiieatibsasnstakensineieunstdnoeseene 14, 20

LaSalle National Bank v. County of Cook, 57 Ill. 2d

_ RRR Ca INTERN aren Renee Nae ae Neen nEe aon 20

Lynch v. Household Finance Corp., 405 U.S. 538 ........ 10

en Gi, Ds SE RUE IIT ectisenecesnisictvistemiennesiinnniscensiinnts 10

People ex rei. v. American Refrigerator Transit Co.,

I EE, ED ccslsciinelsdtldesiiatlncenaiiniscdidintasibsibinniaibindss 21

People ex rel. Munson v. Morningside Heights, 45 III.

SI I i sci 21

People ex rel. Nordlund y. Lans, 31 Ill. 2d 477 (1964) 21

People v. Union Station Co., 383 Ill. 153, 168 .............. 7

OCUOUOT HW. TEOGOR, GIG UTR, TBD ccccccccecnceccsccscceccossscsecsscusess 11

Sioux City Bridge Co. v. Dakota County, 260 U.S. 441 7

oo ES SUS OS oe 8

Spector Motor Service v. McLaughlin, 323 U.S. 101,

EE EITTED cibsasatideteiissciniepilidinicentsemaiapbicianinnnemieniniieiseninics 22

Sunday Lake Iron v, Wakefield, 247 U.S. 350, 352 ...... 7,9

U.S. & Olin Mathieson Co. v. Department of Revenue

of State of Illinois, 191 F. Supp. 723 (1961) .......... 16

——EeEeEeEeeeeeeeeeeeeeeeeeeeeeeee

ll

CoNSTITUTIONAL Provisions

AND

Statutes Crrep

PAGE

Fourteenth Amendment of the United States Constitu-

Ts <snisidirls easiidaaiinisted inten iacainapiainiatihiatd aiid edema 3

| ER ee ene Onna E EE 2

Oe PS CE ine acca teelneaaneamnmnimeiineiniialis 6

i accede arlene deni eaatantaaieeieatds 4

ff | en 2, 3, 4, 5, 6, 12, 14, 15, 16, 21

TD WEE SED ccccnncunnssnssensstennintiunmneninnicnnienvesins 3,4

een 2, 4, 10, 12, 13, 23

ai se

IN THE

SUPREME COURT OF THE UNITED STATES

OctroBer Term, 1975

No.

28 EAST JACKSON ENTERPRISES, INC.,

Petitioner,

vs.

P. J. CULLERTON, Individually and as Cook County

Assessor, and BERNARD J. KORZEN, Individually and

as Treasurer and Ex-Officio Collector of Cook County,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

To the Honorable Chief Justice of the United States and

the Associate Justices of the Supreme Court of the

United States:

Petitioner respectfully prays that a writ of certiorari

issue to review the judgment and opinion of the United

States Court of Appeals for the Seventh Circuit entered

August 8, 1975.

OPINIONS BELOW

The opinions of the Court of Appeals for the Seventh

Circuit and of the United States District Court for the

Northern District of Illinois have not been officially re-

ported. Both slip opinions are set out in the Appendix.

Because it is cited in the District Court’s opinion, that

=

Court’s opinion in the related action, 72 C 1373, is also

set out in the Appendix.

JURISDICTION

The Court of Appeals rendered its judgment and opinion

on August 8, 1975 and denied a timely filed petition for

rehearing on October 9, 1975. This petition is filed within

90 days from October 9, 1975. By its orders of October 16

and November 7, 1975, the Court of Appeals stayed its

mandate until November 24, 1975. Rule 41(b), Federal

Rules of Appellate Procedure. Jurisdiction of this Court

is invoked under 28 U.S.C. §1254(1).

QUESTIONS PRESENTED

Whether the Court of Appeals erred in holding that an

action at law for money damages under 42 USC §1983

against Cook County, Illinois officials in their individual

capacities for longstanding systematic discrimination in

the assessment of real property for tax purposes is barred

by 28 USC $1341? Basically, the question becomes, can

taxpayers who suffer from such discrimination use $1983

in an action for money damages against County assessing

officials to right long standing abuses occasioned by dis-

crimination in execution of the tax laws?

Whether the Coust of Appeals erred in reversing a

preliminary injunction entered by the District Court and

dismissing plaintiff's action for injunctive relief under

42 USC $1983 when plaintiff had no remedy at law in

the state court and its remedy in equity in that court

Was at best uncertain and a mere prediction based on

decisions rendered after the suit was filed?

atten

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

UNITED STATES CONSTITUTION

AMENDMENT XIV

§ 1. Citizenship rights not to be abridged by states

Section 1. All persons born or naturalized in the

United States, and subject to the jurisdiction thereof,

are citizens ef the United States and of the State

wherein they reside. No State shall make or enforce

any law which shall abridge the privileges or immuni-

ties of citizens of the United States; nor shall any

State deprive any person of life, liberty, or property,

without due process of law; nor deny to any person

within its jurisdiction the equal protection of the laws.

* . *

FEDERAL STATUTES

PROVIDE IN PERTINENT PART

Tite 28 USC

§ 1341. Taxes by States

The district courts shall not enjoin, suspend or

restrain the assessment, levy or collection of any tax

under State law where a plain, speedy and efficient

remedy may be had in the courts of such State. June

25, 1948, c. 646, 62 Stat. 932.

§ 1343. Civil rights and elective franchise

The district courts shall have original jurisdiction

of any civil action authorized by law to be commenced

by any person:

(3) To redress the deprivation under color of any

State law, statute, ordinance, regulation, custom or

usage, of any right, privilege or immunity secured

by the Constitution of the United States or by any

Act of Congress providing for equal rights of citizens

or of all persons within the jurisdiction of the United

States;

_ Yo

Tite 42 USC

§ 1983. Civil action for deprivation of rights

Every person who, under color of any statute, ordi-

nance, regulation, custom, or usage, of any State or

Territory, subjects, or causes to be subjected, any

citizen of the United States or other person within

the jurisdiction thereof to the deprivation of any

rights, privileges, or immunities secured by the Con-

stitution and laws, shall be liable to the party in-

jured in an action at law, suit in equity, or other

proper proceeding for redress.

R.S. § 1979.

STATEMENT OF THE CASE

Plaintiff, 28 East Jackson Enterprises, Inc., brought

a civil rights action in the District Court under 42 USC

§1983 and 28 USC 4§1343(3), and under 28 USC $1331

seeking injunctive relief against the defendant Collector

of Cook County, a declaratory judgment, and money dam-

ages against the Collector and his fellow County official,

the Assessor of Cook County, in their individual capacities.

Plaintiff's amended complaint’ alleged gross discrim-

ination of long standing in the assessment of real estate

in Cook County by the defendant Assessor. Specifically

it alleged that notwithstanding the Constitution and laws

of Illinois required all property to be assessed uniformly

at full fair cash value, real property, since not later than

‘ Plaintiff's prayer for injunctive relief in its original

complaint and its motion for a preliminary injunction to

restrain the Collector from proceeding to judgment for

its 1972 taxes were rendered moot by the entry of judg-

ment by the Cirenit Court of Cook County while the

motion was pending before the District Court. An amended

complaint and motion to enjoin sale of the taxes to satisfy

the judgment were filed, against which the defendants’

original motion to dismiss under 28 USC §1341 was allowed

to stand.

—

1958 when he took office, had been assessed by the de-

fendant Cullerton so that property. generally in Cook

County was assessed far below the statutory level of

100% of fair cash value: and, further, so that wide varia-

tions, i.e. from less than 5% to over 120%, of fair cash

value existed between assessments of individual prop-

erties. Plaintiff alleged that the longstanding discrimina-

tory assessment scheme and methods were well known

to ihe defendant officials, their results being officially

reported by the Illinois Department of Local Government

Affairs in its annual reports on real estate tax assess-

ments. It further alleged that in 1972 the general level

of equalized assessment in Cook County was 40% of

fair cash value while its property was assessed at 100%,

requiring it to pay taxes of $82,000 rather than $30,000

if assessed as property generally was assessed.

‘The amended complaint also alleged that plaintiff had

no adequate remedy at law, being without and unable to

borrow funds to pay its taxes in full, a condition prece-

dent to an action in the State Court for a refund of

the illegally assessed moiety. Such procedure is the only

remedy at law in Illinois.’

The defendant County officials filed a motion to dismiss

under 28 USC §1541.

Plaintiff moved for a preliminary injunction under Rule

65, Federal Rules of Civil Procedure, and after an evi-

dentiary hearing the District Court entered an injunction

* Payment of taxes in full under protest and filing of

PP to the annual application by the County nee

lector for judgment, Cf. Chapter 120, Illinois Mer

Statutes §675, 716. In the related case, the District oe

found, App. 14a, that the denial of interest on re row

inter alia, rendered such remedy at law not “plain, speedy

and efficient”.

=

on January 23, 1974, restraining the Collector from selling

the subject property for taxes. Appendix 8a. The Court

found, inter alia, that the taxpayer was unable to pay

its taxes in full, had no plain, speedy and efficient remedy

under Illinois law, would suffer irreparable harm if its

taxes were sold, and had a reasonable likelihood to prevail

ultimately. It further found that the levying of taxes

which have a discriminatory effect between taxpayers can

violate the equal protection clause of the 14th Amendment

to the United States Constitution. App. 9a.

The defendants offered no evidence and relied on their

motion to dismiss and the “integrity of the tax bills”.

The defendant officials appealed under 28 USC §1292

and the Seventh Circuit reversed, Swvygert, J., dissenting

in part. The majority held that 28 USC 4$1341 barred

federal jurisdiction since it was “. . . reasonably certain

that Illinois courts would entertain a suit for. injunction

when a taxpayer establishes that he lacks the funds to

comply with the statutory remedy of payment under

protest.” App. 6a. The Court of Appeals ordered the

entire action dismissed including the declaratory and dam-

age claims, stating that the “Complaint, fairly read, seeks

solely to suspend or restrain the collection of (plaintiff’s)

1972 real estate taxes.” App. 2a.

The dissent held that the majority’s “reasonable cer-

tainty” was based on a mere prediction of what Illinois

law would be and did not approach “a certainty within

the contemplation of §1341.” App. 6a, 7a.

The Court of Appeals reached its decision solely on

jurisdictional grounds under §1341. It did not, therefore,

consider the propriety of the preliminary injunction and

the evidence supporting it heard and considered by the

District Court at the adversary hearing.

= oe

ARGUMENT SUPPORTING REASONS

FOR

GRANTING THE WRIT

L

THE DISMISSAL OF THE CIVIL RIGHTS ACTION

FOR DAMAGES CONFLICTS WITH APPLICABLE DE-

CISIONS OF THIS COURT.

Discrimination in the administration of tax laws in the

assessment of property may result in the deprivation of

equal protection, Sunday Lake Iron v. Wakefield, 247

U.S. 350, 352 (1918):

“The purpose of the equal protection clause of the

14th Amendment is to secure every person witliin the

state’s jurisdiction against intentional and arbitrary

discrimination, whether occasioned by express terms

of a statute or by its improper execution through

duly constituted agents. And it must be regarded as

settled that intentional systematic undervaluation by

state officials of other taxable property in the same

class contravenes the constitutional right of one taxed

upon the full value of his property. Raymond v.

Chicago Unmon Traction Co., 207 U.S. 20, 35, 37, 52

L.ed. 78, 87, 88, 28 Sup. Ct. Rep. 7, 12 Ann. Cas. 757.

It is also clear that mere errors of judgment by offi-

cials will not support a claim of discrimination. There

must be something more,—something which in effect

amounts to an intentional violation of the essential

principle of practical uniformity.”

See also Sioux City Bridge Co. v. Dakota County, 260

U.S. 441 (1923). The Supreme Court of Illinois has so

held, adding that it also constitutes a taking of property

without due process of law. People v. Union Station Co.,

383 Ill. 153, 163 (1943):

“If, as contended by appellant, its property was not

essessed on the same basis of debasement as all other

_

property in the taxing district, such an assessment

amounts to a denial of the equal protection of the

law, and taking property without due process of law

contrary to the provisions of the fourteenth amend-

ment to the constitution of the United States. (Brink-

erhoff-Faris Trust & Savings Co. y. Hill, 281 US.

673, 74 Lied. 1107; Hanover Fire Ins. Co. v. Carr,

272 U.S. 494, 71 L.ed. 372; Siowr City Bridge Co.

v. Dakota County, 266 U.S. 441, 67 L.ed. 340.)”

But it is not an actionable denial of equal protection

unless there is shown to be present in the maladminis-

tration of a state statute fair on its face* an element of

intentional or purposeful discrimination resulting in un-

equal treatment to those entitled to be treated alike.

Snowden v. Hughes, 321 U.S. 1, 8 1943). In Snowden,

commenting on such treatment, this Court stated (pg. 9):

“Another familiar example is the failure of state

taxing officials to assess property for taxation on a

uniform standard of valuation as required by the

assessment laws. It is not enough to establish a denial

of equal protection that some are assessed at a higher

valuation than others. The difference must be due to

a purposeful discrimination, which may be evidenced,

for example, by a systematic under-valuation of the

property of some taxpayers and a systematic over-

valuation of the property of others, so that the prac-

tical effect of the official breach of law is the same

as though the discrimination were incorporated in

and proclaimed by the statute. (Citing cases) Such

discrimination may also be shown to be purposeful,

and hence a denial of equal protection, even though

‘Uniformity in tax assessinents is mandated by the

Ilinois Constitution of 1970. The Revenue Act of 1939,

Chapter 120, Lllinois Revised Statutes $482, et seq., gov-

cerns assessment and taxation of real estate and is ad-

mittedly a fair and equitable state statute.

onions

it is neither systematic nor long-continued. Cf. McFar-

land v. American Sugar Ref. Co., 241 U.S. 79, 60

L.ed. 899, 36 S.Ct. 498, supra.”

See also Sunday Lake Iron vy. Wakefield, 247 U.S. 350, 353.

It is undisputed that longstanding, systematic discrim-

ination exists in the assessment of real estate in Cook

County, Illinois. The Complaint‘ alleges, Paragraph 18,

App. 135, that it has existed under the defendant Assessor

since he took office in 1958; the witness Garber, Super-

visor of Assessments for the State, testified at the hear-

ing in the District Court that the range in assessment

in Cook County ratios’ varies from 5% to over 120%

and that such gross inequalities have existed since 1952.

Ratio Studies, officially prepared and published annually

by the State Department of Revenue for over 20 years,

have shown such discrimination in assessments between

the many types of properties in Cook County and between

individual properties within these types.

The socio-economic consequence of such longstanding

discrimination is apparent. The District Court remarked

in his earlier opinion:

“Disparity in the administration of tax laws can

eause chronic and perhaps irremediable blight in a

large metropolitan area such as Cook County.” App.

16a.

An analy.is of the State ratio studies for the most recent

five years, plaintiff’s Exhibit 8 received at the hearing,

‘References are to the Amended Complaint.

*The ratie of assessed valuation to fair cash value.

Uniform asse.sment at 100% of fair cash value, defined

as market value, was the law since enactment of the

Revenue Act of 1939.

—_

(Appellees Appendix 54, et seq.) reveals that in fact the

greatest discrimination exists in the blighted inner city

areas of Chicago.

Given the magnitude of the abuses, their long standing

character and the tenure in office of the defendant Cul-

lerton, wilful, systematic, purposeful discrimination in

the administration of the tax laws cannot be gainsaid,

thereby clothing such malfeasance with the stamp of offi-

cial policy. Nor is the 1972 tax assessment an anomaly

for this plaintiff.”

Since this Court’s decision in Lynch v. Household Fi-

nance Corp., 405 U.S. 538 (1972), property rights come

within the purview of 42 USC $1983." The statute au-

thorizes “an action at law, suit in equity, or other proper

proceeding for redress.” Plaintiff’s action at law secks

money damages* against the defendants in their individual

capacities and not against Cook County. Edelman vy. Jor-

dan, 415 U.S. 651 (1974) is thus not a bar. Monroe v.

* Plaintiff filed a civil rights action for damages against

these defendants, inter alios, for 1971 taxes which it was

able to pay in full. 72 C 1373. It is still pending. It also

filed an action for 1973 taxes in the same form as the

suit at bar. Its assessments were the same for those 3

vears and is the same for 1974 notwithstanding continuing

but unavailing administrative complaints to the assessing

efficials. Chapter 120 Ill. Revised Statutes §§579, 593-606.

Plaintiff also alleged jurisdiction under 28 USC 1331,

the amount in controversy exceeding $10,000.00.

* Damages are sought in the amount of the excessive tax

levy, viz, $52,000. Real estate taxes for 1972 heeame a

len on plaintiffs property on January 1, 1972, Chapter

120 Illinois Revised Statutes 4697, and albeit the taxes

have not been paid, plaintiff has heen damaged in the

umount of the excessive moiety of the lien.

—

Pape, 365 U.S. 167 (1961), envisions such relief, and as

Judge Friendly remarked in Eisen v. Eastman, 421 F.2d

560 (CLALN.Y., 1969):

“The District Court’s conclusion that the Civil

Rights Act could not be invoked gets no support from

the holding in Monroe v. Pape barring suits there-

under against municipalities. The action here was not

against New York City but against Eastman (the

rent control director). Actions against a government

official acting under color of statutes and ordinances

are what 42 USC 1983 is mainly about.” (pp. 562-3)

More recently, this Court in Scheuer v. Rhodes, 416

U.S. 232 (1974), has said: (at 237)

“However, since Ex parte Young, 209 U.S. 123,

52 L. Ed. 714, 28 S.Ct. 441 (1908), it has been settled

that the Eleventh Amendment provides no shield for

a state official confronted by a claim that he had

deprived another of a federal right under the color

of state law. Ix parte Young teaches that when a

state officer acts under a state law in a manner viola-

tive of the Federal Constitution, he

‘comes into conflict with the superior authority

of that Consitution, and he is in that case stripped

of his official or representative character and is

subjected in his person to the consequences of

his individual conduct. The State has no power

to impart to him any immunity from responsi-

bility to the supreme authority of the United

States.” Id., at 159-160, 52 L. Ed. 714. (lemphasis

supplied).

Ex parte Young, like Sterling v. Constantin, 287

U.S. 378, 77 L. Ed. 375, 53 S.Ct. 190 (1932), involved

a question of the federal courts’ injunctive power,

not, as here. a claim for monetary damages. While it

is clear that the doctrine of Ex parte Young is of

no aid to a plaintiff seeking damages from the public

— 132 —

treasury, Edelman v. Jordan, supra. Kennecott Cop-

per Corp. v. State Tax Comm’n, 327 U.S. 573. 90 L.Ed.

862, 66 S.Ct. 745 (1946); Ford Motor Co. v. Dept.

of Treasury, 323 U.S. 459, 89 L.Ed. 389, 65 S.Ct. 347

(1945); Great Northern Life Insurance Co. vy. Read,

322 U.S. 47, 88 L. Ed. 1121, 64 S.Ct. 873 (1944), dam-

ages against individual defendants are a permissible

remedy in some circumstances notwithstanding the

fact that they hold public office. Myers v. Anderson,

238 U.S. 368, 59 L.Ed. 1349, 35 S.Ct. 932 (1915). See

generally Monroe v. Pape, 365 U.S. 167, 5 L.Ed2d

492, 81 S.Ct. 473 (1961); Moor v. County of Alameda,

411 U.S. 693, 36 L.Ed.2d 596, 93 S.Ct. 1785 (1973).

In some situations a damage remedy can be as effec-

tive a redress for the infringement of a Constitutional

right as injunctive relief might be in another.” (Our

emphasis supplied)

Thus, notwithstanding that this Court has clearly delin-

eated a legal right of redress in the federal courts from

systematic, intentional discrimination in the administra-

tion of state property tax laws, the Seventh Circuit has

summarily denied plaintiff this right by stating, App.

2a, that plaintiff’s action at law for damages against

the defendants in their individual capacities is in reality

a suit to “suspend or restrain the collection of its 1972

real estate taxes” and hence is barred by 28 USC $1341.

Such an abridgement of the breadth of 42 USC $1983

and misconstruction both of plaintiff's complaint and the

proper applicability of $1341 grant imunity to local tax

officials from blatant civil rights deprivations imposed

by their longstanding abuses of the taxing process, pro-

mote a favorable climate for favoritism in the adminis-

tration of tax laws and are patently error. In these crit-

ical days when large cities find themselves in desperate

financial straits, it is of utmost national concern that

= =

their tax laws be administered fairly. The federal govern-

ment has now a vital financial as well as socio-political

interest in such proper administration. This is not an

unwarranted intrusion of the federal government in a

state’s affairs. The District Court so remarked, App. 16a:

“We do not view this as a case where the Federal

courts may vreate an unseemly conflict between two

sovereignties or may unnecessarily impair state func-

tions (Martin v. Creasy, 360 U.S. 219 (1958)) but

rather a case where plaintiffs have alleged a Federal

eause of action which can perhaps only be we"

here. Cf. Brown v. Board of Education, 349 ang 294,

(1955) and Baker v. Carr, 369 U.S. 186 (1962).

At this moment in history, it is imperative that the

federal courts lend their power to the rectification ol haw

tax assessment abuses and laxity present not only in Cook

County but in countless urban counties throughout the

United States. See “Taxable Property Values And Assess-

ment—Sales Price Ratios”, Volume 2, Parts I and 2, US.

Department of Commerce, issued October, 1975. A or"

example of such inequality is found, e.g., In Newark, Nu "

Vol. 2, op. cit., pg. 131, wherein 259% of all single family

homes are assessed at less than 56% of value, the

quartile, whereas 25%, the third quartile, are assesse

at over 110%. No more effective remedy is at hand to

correct these abuses and guarantee to the citivenry the

equal protection of the laws than 42 USC §1983.

The Seventh Circuit has decided an important question

of federal law contrary to applicable decisions of this

Court of long standing and in a manner detrimental not

only to the federally guaranteed rights of plaintiff but to

the national interests at this critical time. Its decision -

this “significant test case” should be reviewed by _

Court and federal law settled on the point. (Cf., District

Court’s opinion, App. 10a)

=

O.

THE DISMISSAL OF PLAINTIFF’S INJUNCTIVE AC-

TION IS CONTRARY TO THE DECISIONS IN HILLS-

BOROUGH V. CROMWELL, 326 US 620 (1946).

In Hillsborough v. Cromwell, 326 U.S. 620, 625, 626,

this Court found in a tax discrimination suit that there

was such uncertainty concerning the New Jersey remedy

as to make it speculative whether the state afforded full

protection to federal rights. Accordingly, it held that such

uncertainty surrounding the adequacy of the state remedy

justified the District Court in granting equitable relief

where, pg. 628, it found it was not clear that the taxpayer

had open any adequate® remedy in the New Jersey courts

for challenging the assessments on local law grounds.

We submit that it is highly uncertain and at best a

mere prediction that Illinois courts will afford equitable

relief in the case at bar; that such uncertainty obviates

the thrust of 28 USC §1341 which requires a “plain, speedy

and efficient remedy” in the state courts.

At the time the within suit was filed in November, 1973,

no Illinois case decided under the Revenue Act of 1939,

as amended by the so-called Butler Bills in 1945, had

granted equitable relief except where the tax imposed was

either on exempt property or was not authorized by law.

Nor has any case been decided since then granting

equitable relief for a discriminatory assessment unless

such a statutory or procedural irregularity existed. Cf.

Hoyne Savings and Loam Association v. Hare, 60 Ill.2d

84 (1974).

°28 USCA §384, in force in 1945, precluded suits in

equity where a “plain, adequate and complete remedy may

he had at law.”

= =

As noted previously, n. 6 supra II, plaintiff is also

plaintiff in an earlier related suit, 72 C 1373, seeking

money damages for 1971 taxes against, inter alios, the

defendants Cullerton and Korzen for the same grounds as

alleged in the instant suit. That action was filed in May,

1972, and jurisdiction was upheld against a $1341 motion

to dismiss on January 23, 1973. App. 12a. At that time,

the law in Illinois was unequivocal in denying equitable

relief from assessment discrimination. In Goodyear v.

Tierney, 411 Ill. 421, 427 (1952), the Court stated:

“From the earliest decisions of this court, illus-

trated by such cases as Chicago, Burlington and

Quincy Railroad Co. v. Frary, 22 Ill. 34, this court

has manifested a reluctance to grant injunctive relief

in tax matters for reasons of sound public policy as

set forth in the Frary case. We there stated that wm-

junctive relief in tax matters should be afforded only

where the tax itself is not authorized by law, or the

tax, if itself authorized, is assessed upon property

not subject to taxation. A reading of the quoted por-

tion of our opinion in the Owens-Illinois Glass Co.

ease as above set forth, which case was decided 85

years after the Frary case, shows that this court

still adheres to the principles it announced in earlier

times—that injunctive relief is given only where the

tax is unauthorized by law or is levied on property

exempt from taxation. Injunctive relief has never

been given in cases in which there have been irregu-

larities in levying a lawful tax or where the relief

sought is to correct an erroneous assessment or to

question the size or amount of an assessment. Ames

v. Schlaeger, 386 Ill. 160, Michigan Central Railroad

Co. v. Carr, 303 Ill. 354. (Emph. supplied)

. * >

Appellant’s real complaint, as evidenced by a careful

study of its brief and argument, is not that it was

assessed but rather that it was assessed for too high

_— =

a figure. Under the principles set forth in our earlier

decisions, this case, therefore, does not involve the

attempted imposition of a tax unauthorized by law

or an attempt to levy upon exempt property and,

therefore, it would not be a proper case for injunctive

relief.” (pp. 428-429)

To the same point, see Hodge vy. Glaze, 22 Ulb2d 294, 297

(1961) where the court said:

“Such relief will not be granted where mere irregu-

larities are alleged to have occurred or where the

proceeding is to correct an erroneous assessment or

to question its amount. (Goodyear Tire and Rubber

('v. v. Tierney, 411 Ll. 421; Lakefront Realty Corp.

v. Lorenz, 19 Ul.2d 415.)

U.S. and Olin Mathieson Co. vy. Department of Revenue

of State of Illinois, 191 F.Supp. 723 (1961), (judgment

vacated and remanded for other reasons, 7 L.Ed.2d 90),

held similarly in a suit seeking a declaration of uncon-

stitutionality of and to enjoin the Illinois Retailers Oecu-

pational tax. Answering the §1341 argument advanced

by the State, Judge LaBuy, writing for the three-judge

panel, said: (pg. 726)

“In order to resolve the contentions of the defen-

dants in their entirety, however, we proceed to deter-

mine the efficacy of the argument that a plain, speedy

and efficient remedy exists in the courts of Illinois.

Such determination bears also on the exercise of

judicial discretion which must guide us, as a federal

court of equity, in determining whether or not we

should grant or withhold a remedy which is within

our equity power to give. Toomer et al. v. Witsell

et al., 1948, 354 U.S. 385, 68 S.Ct. 1156, 92 L.Ed. 1460;

Great Lakes Dredge & Dock Co. v. Huffman, 1942,

519 US. 293, 301, 68 S.Ct. 1070, 87 L.Ed. 1407. The

defendants rely on Owens-Illinois Glass Co. y. Me-

Kibbin, 1943, 385 Ul. 245, 52 N.E.2d 177, to establish

= =

that Olin Mathieson has recourse to the courts of

Illinois to enjoin the tax collection without the neces-

sity of depositing the tax moneys due. In Goodyear

Tire d Rubber Co. v. Tierney, 1952, 411 Ill. 421, 427,

104 N.E.2d 222, the Illinois Supreme Court ruled that

application for injunction is available only to a tax-

payer when the tax is unauthorized by law, i.e., im-

posed when not provided for, or is levied on property

which is exempt. Owens-Illinois Glass Co. v. McKibbin,

supra, 385 Ill. at page 256, 52 N.E.2d at page 182;

Acme Printing Ink Co. v. Nudelman, 1939, 371 IIl.

217, 20 N.Ic. 2d 277. In the instant case it is conceded

by plaintiffs that Olin Mathieson is a retailer subject

to the occupation tax of Illinois. Therefore, it may

not invoke the remedy of injunctive relief in the

courts of Illinois.”

Goodyear being the law, there was no plain, speedy

and efficient remedy either at law or in equity when the

earlier case, 72 C 1373, was filed and jurisdiction upheld;

and none on November 12, 1973 when the present case

was filed, under the local rules, as a related case to 72 C

1373. Clarendon Associales v. Kerzen, 56 I11.2d 95,” upon

which the majority rely as authority for the possibility

of equitable relief in fraudulent assessment cases, denied

equitable relief in a situation similar to that at bar.

Therein a limited partnership owned low income housing

subject to federal rent strictions."* A discriminatory tax

assessment and the inability to pay the taxes in full were

alleged in a suit in equity to enjoin the Collector from

* Clarendon Associates vy. Korzen, et al, 56 Ill.2d 95,

was decided October 1, 1973. Since a petition for rehearing

was filed, denied January 29, 1974, the case did not appear

in the advance sheets until March 4, 1974. Counsel did

not become aware of the case until after the present suit

was filed when a slip opinion was furnished by counsel

for defendants.

= =

collecting the constructively fraudulent tax moiety. As a

condition of granting a temporary injunction, in lieu of

bond, the trial court ordered the balance of taxes paid

(id., pg. 103) into a special interest bearing account and

the limited partners advanced funds in the amount of

taxes enjoined, the limited partnership being without funds

to comply with the court’s order".

Thus, notwithstanding the socio-economic realities of

federally funded 221D3 low income housing, the inability

of the taxpayer to pay the constructively fraudulent por-

tion of $109,000 on top of a proper tax of $136,000, the

fact that the lower court required in lieu of bond the de-

posit of the full amount of the tax which required the

taxpayer's limited partners to advance the funds, the ratio

decidendi of Clarendon was that the remedy at law of

payment in full with suit for refund was adequate and

equitable relief was denied.

If it be relegated to the State courts, can plaintiff

expect to be treated any differently from the plaintiff in

Clarendon from whom the trial court required a deposit

of the balance due as a condition for entering tlie tem-

porary injunction, thereafter reversed on appeal? Unlike

its counterpart in Clarendon, having no shareholders of

means, should plaintiff be required to seek out an in-

vestor to buy stock in it or in desperaton pay an extor-

tionate rate of interest to obtain the $100,000 excessive

tax portion for 1972 and 1973 taxes, for which injunctions

are pending? Is this the plain, speedy and efficient remedy

that Congress envisioned?

Plaintiff respectfully states that the Court of Appeals

either overlooked or misapprehended the foregoing and

"See Briefs of counsel, [ll.Sup.Ct. No. 45561, consolli-

dated, for facts not found in the decision but in the record.

_— op -

—_—-

— =

considered not the facts and the ratio decidendi of Claren-

don but mere dicta, i.e.:

“There will be cases of fraudulently excessive assess-

ments where the remedy at law will not be adequate

and injunctive relief should then be available.” 56

Ill. 2d at 108.

Even defendants’ counsel admitted the uncertainty of

remedy foreshadowed by these dicta: (Defendants’ Brief

in Court of Appeals, pg. i7)

“Therefore, the taxpayer’s right to equitable relief

in Illinois is at best unaltered by Clarendon and at

the worst uncertain.”

If unaltered, it is the rule in Goodyear; if uncertain, it is

contra this Court’s holding in Hudlsborough! Further,

without prescience or clairvoyance, could counsel, viewing

the Illinois line of decisions in the fall of 1973 have

reasonably concluded on the basis of Goodyear v. Tierney,

411 Ill. 421, that an equitable remedy existed in Illinois

which could in the circumstances in which the plaintiff

found itself be a plain, speedy and efficient one? Even

the dissenting justices found Clarendon’s provisions harsh,

pg. 109, and even today its thrust is equivocal. Cf. Real

Estate Tax Assessments—A Study of Illinois Taxpayers’

Judicial Remedies, 24 DePaul Law Review 465 (Winter,

1975). Therein the authors state that if a taxpayer is

without funds to pay the tax resulting from an over-

assessment, there is no equitable relief in Illinois courts

and: (pg. 466)

“In all likelihood, the only recourse is to find a buyer

who can afford to pay the taxes. One cannot expect

any probable avenue of relief in the courts unless he

can first pay the taxes under protest; only then will

he receive some measure of judicial review.”

=_— =

The authors critique Clarendon and LaSalle National Bank

v. County of Cook, 57 Ull.2d 318 (1974) and conclude that

the latter closes the door on any possible equitable relief

except when the traditional elements of either property

exempt from taxation or illegality of the tax are present.

The equitable relief granted in Hoyne Savings and

Loan Association v. Hare, 60 IlL2d 84 (1974), cited by

the majority, was based on irregularities in the taxing

procedures for 1971. Although the same overassessment

was present for 1972 requiring the payment of $19,208

in taxes rather than the admittedly correct amount of

$4,700, and the cases were consolidated, the Illinois court

denied equitable relief in the later year, no irregularities

in procedure being present. The effect of such denial was

to foreclose any possible relief for the plaintiff, the time

for paying the taxes in full and suing at law for refund

having expired. Equity thus countenanced an irremediable

loss of $15,000.

The Court of Appeals also cited Exchange National

Bank vy. Cullerton, 17 Ul.App.3d 392 (1974) as support

for the possibility of plaintiff obtaining equitable relief

in Illinois courts. We note that this decision was rendered

after the suit at bar was filed, as were the decisions in

Hoyne and LaSalle National Bank, and that if fairly read

can in no way even imply that equitable relief could be

granted to a plaintiff unable to pay its taxes in full. The

complaint did not even so allege.

A former uncertainty exists as to whether [Illinois

courts may grant plaintiff equitable relief. The only

grounds for judicial review of property tax assessments

in Illinois is fraud or constructive fraud.” LaSalle Na-

"The scope of review has not been altered by the new

Constitution, LaSalle National Bank, op. cit., pg. 330.

—

tional Bank v. County of Cook, 57 Tll.2d 318, 323 (1974).

See also People ex rel Nordlund v. Lams, 31 Ill.2d 477

(1964). The quantum of overassessment or discrimination

necessary to warrant judicial relief at law has been about

75%. (An overassessment of 71.5% in People ex rel

Munson v. Morningside Heights, 45 I1l.2d 338 (1970) was

deemed insufficient to warrant relief whereas 78% was

sufficient in People ex rel v. Am. Refrigerator Transit Co.,

33 Ill.2d 501 (1966).) Although «? the heariag on the

preliminary injunction plaintiff proved an overa: sessment

substantially in excess of 78%, nonetheless defendants

stood on their motion and adduced no evidence. If on a

full trial in state court the evidence showed that plain-

tiff’s taxes should have been $48,000, although $82,000

was levied against it, no injunctive relief could be af-

forded since equity follows the law and the quantum of

constructive fraud would not satisfy the level established

in the foregoing decisions. Certainly a rule of law de-

priving a taxpayer of a remedy for a $34,000 overassess-

ment on top of a just tax of $48,000 does not square with

the intent of $1341 that a plain, speedy and efficient

remedy be available in the state courts. The District

Court so concluded, App. 15a.

The dissent of Judge Swygert recognizes the uncer-

tainty of equitable relief in Illinois, stating, App. 6a,

that it is: ,

“. .. a mere prediction that certain language in very

recent supreme and appellate court decisions in that

state will be read broadly so as to bring Appellee’s

claim within an exception to the general rule that

taxpayers in Illinois must pay an assessed tax under

protest in order to challenge the validity of the

assessment. In order to reach such a result an Illinois

court would have to find that 1) the assessment here

is ‘fraudulently excessive,’ and 2) the Illinois remedy

of payment under protest is not adequate where one

cannot afford to make such payment. I do not think

either finding approaches a certainty within the con-

templation of section 1341.”

In fine,” we submit that the majority of the Court of

Appeals have misapprehended dicta and negative infer-

ences as the law of Illinois and have relegated plaintiff

to this uncertainty. The practice of law should not be a

“lady or the tiger” selection. Nor should prescience have

been demanded of coursel in 1973 to determine what the

law might be thereafter. The majority admit the thrust

of Hillsborough v. Cromwell, 326 U.S. 620, 625-7 (1946)

that an uncertain remedy is not plain, speedy or efficient.

See also Spector Motor Service v. McLaughlin, 323 US.

101, 105 (1944). By vacating the injunction and dismiss-

ing the case, the Seventh Circuit leaves plaintiff in the

hapless posture of having to file in the state courts and

therein obtain a temporary injunction prior to the time

the mandate issues, at best an uncertain and risky pro-

cedure and an impossible one if bond is required. If the

State injunction does not issue, the Collector, under an

order of sale, will forthwith sell the taxes and any relief

‘** Plaintiff’s complaint also sought declaratory relief,

28 USC §2201. The efficacy thereof “whether or not further

relief is .. . sought” manifestly would occasion concern

on the part of the defendants and undoubtedly move

them to rectify abuses in the taxing process, especially

since the court, in its discretion, might grant substantive

relief in the form of money damages in a declaratory

action. Freed v. The Travelers, Inc., (C.A. 7, 1962), 300

F.2d 395. Because points we would argue contra dis-

missal of the declaratory claim are contained in the two

sections of our argument, it would render the petition

prolix to include a separate section thereon.

ee

ane?

=

whatsoever is forever denied to plaintiff and a forced

sale of its property is its only possible course of action.

CONCLUSION

We thus respectfully submit that the Seventh Cireuit

has decided important and timely issues affecting basic

constitutional rights in conflict with applicable decisions

of this Court; that there has been no decision of this

Court regarding applicability of 42 USC $1983 to discrim-

ination in tax assessments, a question of current vital,

national interest; and, therefore, that the writ should

issue to settle the law in “this significant test case”.

Respectfully submitted,

James L. Fox,

Counsel for Petitioner.

Mossgs, Grppons, ABRAMSON & Fox

Of Counsel

ne eee ee = ee

No. 74-1179

28 East Jackson ENTeERpRises, INc.,

Plaintiff - Appellee,

vs.

P. J. Cutuerton, Individually and as Cook County Asses-

sor, and Bernarp J. Korzen, Individually and as Trea-

surer and Ex-Officio Collector of Cook County,

‘Defendants-Appellants.

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division,

No. 73 C 2876

Tuomas R. McMitien, Judge

Arcuep SepremsBer 13, 1974— Decipep Aveust 8, 1975

Before Farrcuitp, Chief Judge, Swycert and Sprecuer,

Circwt Judges.

Farmcuitp, Chief Judge. Plaintiff, 28 East Jackson En-

terprises, Inc., owns a long-term leasehold interest in an

office building in downtown Chicago and is obligated to

pay the real estate taxes on the property. Defendant

Korzen, Treasurer and ex-officio Collector of Cook County,

levied $82,925.52 in real estate taxes against plaintiff’s

property. Plaintiff, allegedly lacking the funds and abil-

ity to borrow funds to pay the taxes, brought this civil

rights action under 42 U.S.C. $1983 to enjoin Korzen

from making an application for judgment and order of

sale of the property for nonpayment of the 1972 levy.

Federal jurisdiction was alleged to rest on 28 U.S.C.

§1343(3) and 28 U.S.C. $1331.

The gist of the claim is that plaintiff’s 1972 real estate

assessment was fraudulently excessive in that plaintiff’s

property was assessed at 70 percent of fair cash value

while property in Cook County was generally assessed

a

at 25 percent and that such a disparity violated the

equal protection and due process clauses of the Fourteenth

Amendment of the United States Constitution, Art. LX,

§4(a) of the Illinois Constitution, and $501 of ch. 120,

Ill. Stat. Ann. (Smith-Hurd Supp. 1975-76).' At no time

have these issues been presented to an Illinois court.

Plaintiff sought a preliminary injunction, and the de-

fendants filed a motion to dismiss for lack of jurisdic-

tion and failure to state a claim. Before the district

court ruled on the motions, the Circuit Court of Cook

County, on the defendant Korzen’s application, entered

judgment and order of sale against plaintiff’s property.

Plaintiff amended its complaint to enjoin the state court

ordered tax sale. After a hearing, at which defendants

did not rebut plaintiff’s claim but chose to rely on their

jurisdictional defenses, the district court granted plain-

tiff preliminary injunctive relief. Defendants brought

this interlocutory appeal pursuant to 28 U.S.C. §1292(a)

(1). We reverse.

Plaintiff’s complaint, fairly read, seeks solely to sus-

pend or restrain the collection of its 1972 real estate

taxes.* As such, it must withstand a jurisdictional chal-

‘At Illinois law plaintiff’s claim is recognized as a

claim sounding in constructive fraud. If a taxpayer can

prove that his property is assessed at a value dispropor-

tionately higher than similarly situated properly, the as-

sessment is deemed fraudulent. See, e.g., People ex rel.

Skidmore v. Anderson, 56 Ill.2d 334, 307 N.E.2d 391

(1974). If the taxpayer prevails, his taxes are reduced

“to the amount they would have been had other locally

assessed property been assessed at the same percentage

of value as that of the objector.” People ex rel. County

Collector v. Amer. Refrig. Co., 33 Ul.2d 501, 505, 211

N.E.2d 694, 697 (1965).

*In addition to injunctive relief, plaintiff requests

damages and a declaratory judgment that all of its taxes

in excess of $30,400 are unconstitutional and void. Al-

though there is an argument that 28 U.S.C. §1341 does

not bar a federal court from issuing declaratory relief,

1A, pt. 2, J. Moore, Moore’s Federal Practice {0.207 at

eh eee ee

—

lenge under 28 U.S.C. §1341 if this action is to be main-

tained. See, e.g., Miller v. Bawer, et al., No. 74-1138 (7th

Cir., June 2, 1975). That statute provides:

The district courts shall not enjoin, suspend or re-

strain the assessment, levy or collection of any tax

under State law where a plain, speedy and efficient

remedy may be had in the courts of such state.

Section 1341 codifies the well-established federal policy

of noninterference in matters of state taxation. Great

Lakes Dredge & Dock Co. v. Hoffman, 319 U.S. 293, 298-

99 (1943). “The serupulous regard for the rightful inde-

pendence of state government which should at all times

actuate the federal courts, and a proper reluctance to in-

terfere by injunction with their fiscal operations, require

that such relief should be denied in every case where the

asserted federal right may preserved without it.” Mat-

thews v. Rogers, 284 U.S. 521, 525 (1932).

Defendants contend that Illinois provides plaintiff

“plain, speedy and efficient” remedies to challenge the

lawfulness of its tax bill. The standard Illinois remedy

for objecting to a real estate tax bill is payment under

protest and claim for refund pursuant to [ll. Ann. Stat.,

ch. 120, §675 (Smith-Hurd Supp. 1975-76).* But this

? (Cont >ued)

2285 (4th ed. 1974), and the Supreme Court has declined

expressly to decide the question, Great Lakes Dredge &

Dock Co. v. Huffman, 319 U.S. 293, 299 (1943), we see

no reason to treat declaratory and injunctive relief dif-

ferently in this context. See Perez v. Ledesma, 401 US.

82, 127-28, n. 17 (1971) (opinion of Brennan, J.). Nor do

we think the damage allegations alter the true nature of

this lawsuit. The amended complaint contains only the

general type of averments of wilfulness, recklessness,

and malice found insufficient to show a purposeful dis-

crimination between persons or classes of persons.

Snowden v. Hughes, 321 U.S. 1, 9-10 (1944).

* Taxpayers living in Cook County may also challenge

real estate assessments in administrative proceedings by

filing an application for revision with the County As-

—

remedy requires that the taxes be paid in full before

the taxpayer’s claim will be considered. Jd. at §716. In

view of the district court’s express finding that plaintiff

did not have and could not borrow sufficient funds to pay

the full tax, this remedy is not available in this case.‘

Alternatively, defendants contend that plaintiff can

pursue equitable relief in the Illinois courts. A remedy

by injunction is a plain, speedy and efficient remedy with-

in the meaning of 28 U.S.C. $1341. Kiker v. Hefner, 409

F.2d 1067, 1070 (5th Cir. 1969). In response, plaintiff

asserts that such relief is unavailable, or uncertain, in

the Illinois courts.

Plaintiff relies heavily on language in Clarendon As-

socuates v. Korzen, 56 Ill.2d 101, 107, 306 N.E.2d 299

(1973), that Illinois courts will no longer consider a con-

structively fraudulent assessment as an _ independent

ground for equitable relief. As we read the opinion,

however, the court decided that whenever the statutory

remedy was an adequate remedy, a taxpayer did not have

the choice of injunctive relief. The Illinois Court quite

clearly states that, “There will be cases of fraudulently

excessive assessments where the remedy at law will not

* (Continued)

sessor. Ill. Ann. Stat., ch. 120, §579 (Smith-Hurd “Supp.

1975-76) or presenting a complaint before the county

Board of Appeals. /d. §§$593-606. Plaintiff’s complaint

alleges that relief before the Cook County Board of Ap

peals was sought, but that the Board ordered no change

in the assessment.

* Taxpayers are not entitled to interest on a refund of

taxes paid under protest under Ill. Stat. Ann., ch. 120,

§$675, 716 (Smith-Hurd Supp. 1975-76). Lakefront Realty

Corp. v. Lorenz, 19 Il.2d 415, 42223, 167 N.E.2d 236,

240-41 (1960). Plaintiff has argued that this renders

the statutory remedy inadequate. See United States v.

Department of Revenue of State of Ill., 191 F.Supp. 723,

726-27 (N.D. Ill. 1961), vacated on other grounds, 368

U.S. 30. Since this remedy is not otherwise viable in this

case, we express no opinion on this point.

=

be adequate and injunctive relief should then be avail-

able.” 56 Ill.2d at 108, 306 N.E.2d at 303 (emphasis sup-

plied). Accord, LaSalle Nat’l Bk. v. County of Cook, 57

Tll.2d 318, 312 N.E.2d 252 (1974); Hoyne Savings & Loan

Association v. Hare, 60 Ill.2d 84, 322 N.E.2d 833, 836

(1974). Since the legal remedy considered adequate in

Clarendon was the statutory remedy of payment under

protest, it follows that when that remedy is unavailable,

as in the present case, an action for an injunction will

lie.

This reasoning is fortified by the policy analysis in

the Clarendon opinion. In Illinois there is no require-

ment that taxes be paid in full before an injunctive suit

may be instituted. Therefore, the Illinois court reasoned,

if taxpayers could choose between injunctive relief and

the statutory remedy of payment under protest, they

would pursue the injunctive remedy to delay payment

of the taxes. To permit such a choice would impair the

collection of state revenues and undermine the purpose of

the statutory remedy. 56 Il.2d at 108, 306 N.E.2d at

303. In the instant case these considerations are not

operative. Here, the taxpayer is not seeking equity to

delay payment of the taxes; he is seeking equity because

he has no other recourse.

Our view of the Illinois law is further supported by

the recent opinion in Exchange National Bank v. Culler-

ton, 17 Ill. App.3d 392, 308 N.E.2d 284 (1974). There, a

taxpayer appealed the dismissal of an action seeking to

enjoin the collection of an allegedly excessive assess-

ment, asserting, though he had failed to allege it in his

complaint, that equitable relief was appropriate because

he lacked the funds to pay the taxes under protest. In

affirming the dismissal, the appellate court suggested that

the complaint would not have been dismissed had it al-

leged the taxpayer’s inability to pay the taxes. 17 Iil.

App.2d at 395, 308 N.EF.2d at 286-87.

Finally, the Illinois Supreme Court has been willing

to grant equitable relief even in instances in which the

statutory remedy was available and the tax was neither

anliiin

unauthorized nor levied against exempt property. In

Hoyne Savings & Loan Association v. Hare, 6 Tll.2d 84,

322 N.E.2d 833 (1974), the taxpayer sought and was

granted equitable relief for fraudulent assessment where

particular circumstances persuaded the Court that it

would be unfair and unjust to require that relief be

sought through the statutory remedy.

We recognize that if the adequacy of a state remedy

is uncertain, section 1341 does not divest the federal

courts of jurisdiction. Hillsborough v. Cromwell, 326

U.S. 620, 625-26 (1946). But we believe that it is rea-

sonably certain that Illinois courts would entertain a

suit for injunction when a taxpayer establishes that he

lacks the funds to comply with the statutory remedy of

payment under protest. Under such circumstances, the

principles of comity and restraint embodied in section

1341 require that plaintiff first seek equitable relief in

the Illinois courts.

Accordingly, the order appealed from is reversed and

the cause is remanded with directions to dismiss the com-

plaint for lack of jurisdiction.

REVERSED.

Swycert, Circuit Judge, dissenting in part. While I

agree that principles of comity and restraint weigh

heavily in favor of this court staying its hand in this

ease, I cannot agree that it must do so for lack of jurisdic-

tion. Section 1341 does not apply when the existence or

adequacy of a state remedy is in doubt or uncertain.

Hillsborough v. Cromwell, 326 U.S. 620, 625-26 (1946).

While it appears “reasonably certain” to the majority

that Illinois courts will entertain a suit for injunctive

relief by the appellee, this is in reality a mere prediction

that certain language in very recent’ supreme and ap-

‘Significantly, the decisions in Exchange National

Bank v. Cullerton, 17 Ill. App. 3d 392, 308 N.E.2d 284

(1974) and Hoyne Savings Loan Assoc. v. Hare, 60

Ill.2d 84, 322 N.E. 2d 833 (1974) were rendered after the

— (eo

pellate court decisions in that state will be read broadly

so as to bring appellee’s claim within an exception to

the general rule that taxpayers in Illinois must pay an

assessed tax under protest in order to challenge the

validity of the assessment. In order to reach such a re-

sult an Illinois court would have to find that 1) the

assessment here is “fradulently excessive,” and 2) the

Illinois remedy of payment under protest is not adequate

where one cannot afford to make such payment. I do not

think either finding approaches a certainty within the

contemplation of section 1341.

It therefore seems to me that the district court has

jurisdiction to enjoin the sale of appellee’s property.

But this does not necessarily mean that such an injunc-

tion is proper or justified. Independent of section 1341,

principles of comity and the greater public interest must

be carefully considered in deciding whether in a given

ease a federal court of equity should interfere in a mat-

ter involving the collection of taxes under state law. Cf.

Great Lakes Co. v. Huffman, 319 U.S. 293, 297-301

(1943). In this particular case it may well turn out that

Illinois courts will provide an adequate remedy for ap-

pellee by entertaining its suit for injunctive relief, At

least it would seem incumbent on it to seek state relief

prior to resorting to the federal forum. I would there-

fore remand this case to the district court with instruc-

tion that it vacate its injunction and abstain from any

further action in this matter pending submission of ap-

pellee’s claims to an Illinois forum. I would further

direct the district court to retain jurisdiction in this

case until appellee has either obtained his remedy in that

forum or shown an effective denial of such a remedy.”

* (Continued)

district court entered its injunction. See Spector Motor

Service v. O’Connor, 340 U.S. 602, 605 (1951): Dawson v.

Kentucky Distilleries Inc., 255 U.S. 288, 295-96 (1961).

* Since judgment has already been entered against the

property, retention of jurisdiction would assure that if

=

Unrrep States Districr Court

Northern District Of Illinois

Eastern Division

28 East JacKSON ENTERPRISES, INC., )

Plamttff ,

v.

P. J. Cutterton, Individually and

as Cook County Assessor, and} No. 73 C 2876

Bernarp J. Korzen, Individually

and as Treasurer and ex-officio

County Collector of Cook County,

Defendants. |

PRELIMINARY INJUNCTION

This cause came on to be heard on plaintiff's motion

for a preliminary injunction to enjoin the defendant

Korzen from selling plaintiff’s real estate for 1972 taxes.

The court heard evidence submitted by the plaintiff, and

the defendants offered none. They rely on their motion

to dismiss for lack of jurisdiction and upon the “integ-

rity of the tax bills.” Other legal defenses are raised

in their written argument and have been considered. We

find and conclude that plaintiff is entitled to a pre-

liminary injunction until further order of this court.

On the issue of Federal jurisdiction, the court has

already ruled in favor of the plaintiff in an earlier case

between these same parties (No. 72 C 1373). The levy-

* (Continued)

state law does not contemplate equitable relief under

these circumstances, the district court could take ap-

propriate action with dispatch so as to avoid a preemp-

tive sale of the property. I would also note my view in

this regard that the majority opinion does not preclude

a later resort to the federal courts in this case should

it become clear that, contrary to the prediction of the

majority of our panel, Illinois courts decline to enter-

tain a suit for injunctive relief by the appellee,

—

ing of taxes which have a discriminatory effect between

taxpayers can violate the equal protection clause of the

14th Amendment to the Constitution of the United

States. See Sunday Lake Iron Co. v. Wakefield, 247 US.

350 at 352 (1918). This affords the court jurisdiction

under 28 U.S.C. §1343 and 42 U.S.C. §1983.

The plaintiff does not have a speedy and efficient

remedy under the laws of the State of Illinois. Hence

28 U.S.C. §1341 is no impediment to an injunction. We

will not repeat the reasons for this as stated in our

decision in 72 C 1373 entered January 23, 1973. Thus

the only new question raised by plaintiff’s motion is

whether it has shown by the evidence that it is entitled

to preliminary equitable relief by way of an injunction.

We find and conclude that plaintiff.very likely will be

irreparably damaged if a preliminary injunction is not

entered before its leasehold is sold for taxes on January

24, 1974. Plaintiff has testified without contradiction

that it has no funds with which to pay its 1972 tax. It is

likewise undisputed in the evidence that plaintiff cannot

borrow this amount, presumably because its sole asset is

a lease which is subject to termination upon a tax sale.

Termination of the lease would leave plaintiff with no

assets or remedy except by means of the instant law-

suit, and it would probably be deprived of the financial

ability to carry forward the lawsuit.

We also find and conclude that plaintiff has a reason-

able likelihood to prevail ultimately. The evidence shown

that its property was taxed at 68% of cash value in

1972 when real estate generally in Cook County was be-

ing taxed at 27% of full value. This violated Sec. 501

of Chapter 12 of the Illinois Revised Statutes and ap-

parently violates Art. IX, See. 4(a) of the Illinois Con-

stitution of 1970. The defendants have not put these

facts at issue by evidence or by filing an answer to the

complaint or to the motion for a preliminary injunc-

tion, preferring to rest solely upon issues of law. They

assert in their Argument that the Cook County Assessor

— 10a —

has been following a system of classification and that

plaintiff has not shown that its property is taxed dis-

criminatorily within its own class. However, the evidence

does not show any system of classification either in 1972

or before, but it does show a variation from approx-

imately 20% to 42% in the assessment of different kinds

of real estate in Cook County compared to their fair

market value.

Just what defendant believes to be plaintiff’s speedy

and efficient remedy in the State Court escapes us.

Plaintiff no longer has the legal right to pay its taxes

under protest, and its evidence is undisputed that it

lacked the financial ability to do so at any time after the

1972 taxes were assessed. Furthermore this has been

termed a “cumbersome and ponderous process” by the

Illinois Supreme Court in People ex rel. Kohorst v. G.M.

& O.R.R. Co., 22 Til. 2d 104, 109 (1961). Even if it could

have paid under protest, we have previously held that

the disparity between the current interest rate and the

defendants’ refusal to pay any interest on taxes paid

under protest deprives plaintiff of the kind of remedy

contemplated by Sec. 1341. See our opinion in No. 72 C

1373 referred to above.

The question of comity between the Federal and County

jurisdiction is not as dramatically presented in the case

at bar as it was in the class action previously upheld

by this court in Biasco, etc. v. Cullerton, et al., 72 C 1224.

The amount of taxes assessed against plaintiff is a

miniscule proportion of the County’s tax revenue (al-

legedly .008%), and the entry of a preliminary injunc-

tion will have no discernible effect on the performance

of its governmental functions. See also the numerous in-

stances where Federal courts do intervene in state pro-

ceedings recently reviewed by Justice Douglas, dissenting

on another point, in O’Shea v. Littleton, ........ i oe ,

42 U.S.L.W. 4139 at 4146 (1974). We believe that the

slight deprivation suffered by the taxing body by the

issuance of a preliminary injunction is outweighed by

the desirability of arriving at a final decision in this

significant test case.

— lla —

We have considered the possibility of requiring plain-

tiff to post a bond for the amount of its taxes pending

the outcome of this case. This has not been requested by

the defendants, and we will not require one on our Own

motion, because it appears from the evidence that plain-

tiff has ample assets to guarantee the payment of its

1972 taxes with interest if this is the final outcome of

this lawsuit. On the other hand, we are not going to

enter an injunction pending the final outcome of this

ease because the defendants may wish to offer evidence

on factual issues which have so far been uncontested.

We see no reason why this case and No. 72 C 1373 can-

not be tried on their merits within the next few months.

It Is Therefore Ordered, Adjudged And Decreed that

defendant Bernard J. Korzen, Individually and as Treas-

urer and ex-officio County Collector of Cook County is

enjoined from selling plaintiff's property designated as

index nos. 1715 104 020 and 021 for the 1972 real estate

taxes until further order of this court.

ENTER:

/s/ Thomas R. McMillen

Thomas R. McMillen

Judge, U. S. District Court

Dated: January 23, 1974

= a

Unirep States Distrricr Courr

Northern District Of Illinois

Fastern Division

Brasco Musica Instrument Co.,>

an Illinois corporation, et al.,

Plaintiff s,

v.

P. J. CuLLerton, individually and

as Cook County ieaniaan” Gio. No. 72 C 1226

NARD Korzen, individually and as

TREASURER AND Ex-Orricio County

Cotiector Or Cook Country, et al,

Defendants.

and - CONSOLIDATED

28 E. Jackson ENrTerprises, Inc.,

an Illinois corporation, et al,

Plaintiffs,

v.

P. J. CuLierton, individually and No. 72 C 1373

as Cook County Assessor, BeEr-

NARD KorzeN, individually and as

TREASURER, AND Ex-Orricio County

Co..ector Or Cook County, et al, J

DECISION and ORDER

These two related cases are brought by owners of com-

mercial real estate in Cook County, Illinois. They chal-

lenge the 1971 tax assessments in which the defendants

participated in various ways, and allege violations of

plaintiffs’ constitutional rights to equal protection and

to due process. Thus the suits are brought as civil rights

actions under 42 U.S.C. $1983. Defendants have filed

motions to dismiss for failure to state a claim and for

other reasons, thereby admitting the well-pleaded allega-

tions of the Complaints for the purpose of their motions.

The Complaint in No. 72 C 1224 alleges that plaintiff’s

property was taxed at 155% of its fair cash value in

1971 which was approximately 3.7 times the level at

~—

which property generally is taxed in-that County. The

Complaint is filed on behalf of a class consisting of

that 25% of the owners of real estate parcels in Cook

County who allegedly are in the same predicament as

the plaintiff. Case No. 72 C 1373 is filed by a single tax-

payer alleging that its property was taxed at 100% fair

cash value but that other property in Cook County is

taxed at an average of 42.93% of fair value and that

this plaintiff pays 2.3 times more than it would if all

property were assessed at 100%.

By suing for money damages against the Cook County

Assessor and other County officials and their sureties,

inter alia, plaintiffs seek to avoid the limitation im-

posed on Federal courts by 28 U.S.C. §1341 which pro-

vides :

The district courts shall not enjoin, suspend or

restrain the assessment, levy or collection of any

tax under State law where a plain, speedy and effi-

cient remedy may be had in the courts of such State.

The specific prohibition of Section 1341 has been re-

cent. expanded to Complaints seeking money damages

pursuant to the doctrine of abstention. utter v Cook

County, Illinois, ........ yy z= , (7th Cir, #72-1316,

decided October 10, 1972). In that case the dismissal of

a class action against the assessor for damages was

affirmed primarily on the ground of comity. The Court

of Appeals concluded that the plaintiff taxpayer had an

adequate remedy under Illinois law and that the Federal

courts might unnecessarily interfere with the local govern-

ment’s operation if it accepted jurisdiction of his Com-

plaint. That court also added that “there is no discernible

pattern of prejudice against the taxpayer” [citations

omitted }.

A leading statement on the subject of comity in state

tax matters appears in Matthews v. Rodgers, 284 U.S.

521 at 525-6 wherein Justice Stone wrote:

The scrupulous regard for the rightful independence

of state governments which should at all times

¢

— l4a —

actuate the federal courts, and a proper reluctance to

interfere by injunction with their fiscal operations,

require that such relief should be denied in every

ease where the asserted federal right may be pre-

served without it. Whenever the question has been

presented, this Court has uniformly held that the

mere illegality or unconstitutionality of a state or

municipal tax is not in itself a ground for equitable

relief in the courts of the United States. If the

remedy at law is plain, adequate, and complete, the

aggrieved party is left to that remedy in the state

courts, .. ., or to his suit at law in the federal courts

if the essential elements of federal jurisdiction are

present [citations omitted]

In the cases at bar, plaintiffs have raised two issyes

which we believe distinguish their complaints from the

one considered in Hutter. They claim that the remedy

available in the Illinois courts is not complete and

adequate because interest is not allowed on any tax re-

fund which may eventually be obtained. Lakefront Realty

Corp. v. Lorene, 19 Ill.2d 415 (1960). Since it could re-

quire several years to recover any overpayment, plain-

tiffs would be deprived of the use of their money for

a long period of time. The cumulative effect of this

lack of interest, aggravated by the decrease in the value

of money caused by inflation, results in a substantial

deprivation of property under the Illinois system of tax

refunds. The class action, if proper, would involve

great sums of the plaintiffs’ money used by defendants

without interest.

The deprivation of interest has been held to constitute

an inadequate remedy by a divided three-judge court in

Umted States v. Livingston, 179 F.Supp. 9 (E.DS.C.

1959), aff'd per curiam 364 U.S. 281 (1960). That court

enjoined the State of South Carolina from collecting a

sales tax on sales by the Dupont Company to the Atomic

Energy Commission. Judge Haynsworth relied on several

cases illustrating the inadequacy of the state court

=

remedy in the absence of interest, including Hopkins

v. Southern California Telephone (Co., 275 U.S. 398

(1928).

A second feature of the Complaints in the cases at

bar is their claim that Illinois courts will not review

real estate assessments except in the event of fraud.

In Case No. 72 C 1373, plaintiff does not contend that

its property is over-assessed; thus this taxpayer has

no statutory remedy by which to complain about its

own taxes. It has the right to file complaints with the

defendant Board of Tax Appeals against the allegedly

under-assessed parcels, but this is not an efficient remedy

in view of the fact that over a million parcels are

allegedly involved.

Plaintiffs do not allege actual fraud but wish to try

to prove constructive fraud pursuant to the dicta con-

tained in such cases as People ex rel. Frantz v. M.D.B.

K.W., Inc., 36 Til.2d 209 at 211 (1966). The [Iilinois

courts have seldom if ever found constructive fraud in

tax assessment cases, having recently held it to be lack-

ing in an over-assessment of approximately 70%. People

ex rel. Munson v. Morningside Heights, Inc., 45 T.2d 338

(1970); ef. People ex rel. Town of Cicero v. Sweitzer,

339 Tl. 28 (1930). The plaintiff in No. 72 C 1224 alleges

a 55% over-assessment and plaintiff in No. 72 C 1373

alleges no over-assessment. Neither of these claims con-

stitute constructive fraud under the [Illinois decisions,

but the result when other parcels are allegedly taxed

at a much lower rate certainly seems to justify a hear-

ing to determine the facts. The lack of an opportunity

to effectively challenge a discrepancy of this magnitude

in the state courts deprives the plaintiffs of the con-

stitutional rights alleged in the Complaints. In short,

both plaintiffs have stated a cause of action under Sec-

tion 1983 for which they do not have a plain, speedy

and efficient remedy in the state courts of Illinois.

The question remains whether this court should ab-

stain, as was done in Hutter. The features which dis-

anti

tinguish the cases at bar from Hutter, as stated above,

have satisfied this court that plaintiffs have alleged a

violation of their constitutional rights which is not

adequately remedied in the State courts. We do not

view this as a case where the Federal courts may create

an unseemly conflict between two sovereignties or may

unnecessarily impair state functions (Martin v. Creasy,

360 U.S. 219 (1958) ) but rather a case where plaintiffs

haved alleged a Federal cause of action which can per-

haps only be remedied here. Cf. Brown v. Board of

Education, 349 US. 294 (1955) and Baker v. Carr, 369

U.S. 186 (1962). Disparity in the administration of tax

laws can cause chronic and perhaps irremediable blight

in a large metropolitan area such as Cook County.

Therefore, as was said in Zwickler v. Koota, 389 USS.

241, n.4 (1967), the “better practice” is to retain juris-

diction.

Government officials such as the defendants have been

answerable for their wrongful acts since at least Mon

roe v. Pape, 365 U.S. 167 (1961). Also plaintiffs’ prop-

erty rights are now subject to the protection of Section

1983. Lynch v. Household Finance Corp., 405 U.S. 538

(1972). Defendant Lehnhausen filed a separate motion

to dismiss on the ground that no claim is stated against

him. As Director of the Illinois Department of Local

Governmental Affairs, he has a statutory duty to see

that all assessments of property are relatively just and

equal (/ll. Rev. Stat., (1971), Ch. 120, §611(1) and $621).

Since his own published documents allegedly show that

the Cook County assessments are not just and equal, he

is a proper party defendant in a civil rights action.

In addition to their civil rights action, plaintiffs in

Counts III and IV have alleged violations of certain

Lilinois statutes and certain provisions of the [Illinois

Constitutions. Under the circumstances, these counts are

proper pendent claims. Furthermore, the more expan-

sive approach to Federal jurisdication taken by some

courts permits the surety companies which indemnify

the public officials to be added as proper parties defen-

— 17a —-

dant, since they can be sued directly under Chapter 103,

Section 13 of the Jllinois Revised Statutes. Cf. Leather’s

Best, Inc. v. S. S. Mormaclynz, et al., 451 F.2d 800 (2nd

Cir. 1971).

Plaintiffs in case 72 C 1373 have pleaded Counts V and

VI which do not appear in the class action No. 72 C

1224. These last two counts seem to be an attempt to

articulate some of the theories which we have held above

to be implicit in the other counts. The complaints with-

out these two additional counts are already too prolix to

constitut. a “short and plain statement” of the plain-

tiffs’ clam. Therefore we will grant the motion to dis-

miss Count V and VI of Case 72 C 1373, with leave

granted to amend the remaining portions of the Com-

plaint to incorporate any portions of these counts else-

where if deemed necessary.

The foregoing rulings merely mean that the plain-

tiffs have stated “a claim upon which relief can be

granted.” This should not he taken to mean that all

of the claims or all of the relief praved for are neces-

sarily proper. At this stage of the proceedings, how-

ever, we sustain both complaints against all defendants.

It Is Hereby Ordered, Adjudged And Decreed that

defendants’ motions to dismiss the complaints are denied

except as to Counts V and VI of Case 72 C 1373, and

plaintiffs are granted leave to amend their complaints

within five (5) days hereof. Defendants are ordered to

answer both Complaints within twenty (20) days hereof.

This case will be called for a report on status on February

20, 1973 at 10 a.m.

Enter:

/s/ Thomas R. MeMillen

Thomas R. MeMillen

Judge, U.S. District Court

Jan. 23, 1973