# 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 > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385003_1352%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1976 - **Citation:** 434 U.S. 1073 ## Text 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 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 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385003_1352%3A1. Public record. Not legal advice.