Petition — Fried v. Carey

ee

Supreme Court, U.S -

FILED

SEP 20 1972

MicHameerrre ie CLERK

IN THE

Supreme Court of the Anited States

OcTOBER TERM, 1978

No 78-475

BERNARD ALLEN FRIED, JOAN FRIED, COMMUNITY

REDEMPTION CORPORATION, An ILLINOIS CORPORA-

TION, AND CHEROKEE LANDS CORPORATION, an

ILLINOIS CORPORATION, ae

Bs Petitioners,

Ay

BERNARD CAREY, INDIVIDUALLY, AND AS STATE’S ATTORNEY

OF Cook COUNTY, ILLINOIS,

Respondent.

PETITION FOR A- WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE SEVENTH CIRCUIT.

BERNARD ALLEN FRIED,

134 North LaSalle Street,

Chicago, Llinois 60602,

ANdover 3-7875,

Attorney for Petitioners.

Gunthorp-Warren Printing Company, Chicago e Financial 6-6565

IN THB

Supreme Court of the Anited States

OCTOBER TERM, 1977

BERNARD ALLEN FRIED, JOAN FRIED, COMMUNITY

REDEMPTION CORPORATION, An ILLINOIS CORPORA-

TION, AND CHEROKEE LANDS CORPORATION, an

ILLINOIS CORPORATION, na

Petitioners,

vs,

BERNARD CAREY, INDIVIDUALLY, AND AS STATE’S ATTORNEY

oF Cook CounrTy, ILLINOIS,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE SEVENTH CIRCUIT.

Petitioners pray that a Writ of Certiorari issue to the United

States Court of Appeals for the Seventh Circuit to review the

Order and Judgment of that Court affirming the dismissal of

Petitioners’ Complaint by the United States District Court on

Respondent’s Motion to Strike, which Order of affirmance was

entered on June 26, 1978.

-

OPINION BELOW.

The opinion of the United States Court of Appeals is not

reported by Order of that Court, and is contained in the Appen-

dix hereto, as is the Decision of the United States District Court.

JURISDICTION.

The Judgment of the United States Court of Appeals for the

Seventh Circuit, sought to be reversed, was entered on June 26,

1978. The jurisdiction of this Court is invoked under Title 28,

U.S. C., Section 1343(3).

QUESTION PRESENTED FOR REVIEW.

The question presented for review is whether a Complaint

which charges a State’s Attorney with bad faith, discriminatory

and harassing application of a State law, wherein he seeks

personal judgments against the Petitioners for unpaid real estate

taxes, properly comes under the ambit of Title 28, U. S. C.,

Section 1343(3), or is absolutely barred by Title 28, U. S. C.,

Section 1341.

STATEMENT OF THE CASE.

Petitioners-taxpayers complained of the discriminatory, selec-

tive attempt by the Respondent-State’s Attorney of Cook County,

Illinois, to subject them to personal judgments for non-payment

of real property taxes solely for the purpose of harassment,

under color of a State statute (Section 756, Chapter 120, Il.

Rev. Stats.*).

In spite of the fact that the Respondent, by his Motion to

Strike the Complaint, admitted these charges, the United States

* Section 756:

“Suits for taxes on forfeited realty or delinquent personalty.

The county board may, at any time, institute suit in a civil

action in the name of the People of the State of Illinois in the

circuit court for the whole amount due for taxes and special

assessments on forfeited property; or any county, city, town,

school district or other municipal corporation to which any

such tax or special assessment may be due, may, at any time,

institute suit in a civil action in its own name, before the circuit

~ court, for the amount of such tax or special assessment due any

such corporation on forfeited property, and prosecute same to a

final judgment. . .”

3

District Court dismissed the Complaint chiefly on the ground

that Title 28, U. S. C., Section 1341 prohibited a district court

from enjoining or restraining the collection of any State tax

“where a plain, speedy and efficient remedy is available in the

State Court”. This Order was affirmed by the United States Court

of Appeals.

The facts of the case, all of which are admitted by the Re-

spondent by reason of his Motion to Strike (Garrett v. Bamford,

538 F. 2d 63, 65 [1976]), simply stated, are as follows:

That the Respondent-State’s Attorney of Cook County, Illi-

nois, under color of Section 756, Chapter 120, Ill. Rev. Stats.

(which provides for suit to be filed for personal judgments

against owners of property forfeited for non-payment of real

estate taxes), embarked upon a program of harassing and

selective discrimination of enforcement of the statute, directed

against these Petitioners.

That as the Complaint charges and the Respondent admits,

prior to the institution of the suits by the Respondent against

these Petitioners, this very Section 756, under which the Re-

spondent was proceeding, had been used by him, not for the

purpose of collecting the full amount of the taxes and interest,

but for the purpose of settling and compromising for a sum less

than the amount due for taxes, with other taxpayers similarly

situated to the Petitioners.

As further evidence of the Respondent’s harassing and dis-

criminatory prosecution of these Petitioners, the Complaint

charged that the Respondent purposefully disregarded the lia-

bility of previous owners of the very properties owned by the

Petitioners, which had been likewise forfeited for non-payment

of taxes; and that the records of the tax bodies of Cook County

affirmatively disclosed adjoining properties, which were assessed

for much greater sums than those of the Petitioners, were not

subjected to the suits filed against these Petitioners seeking

personal judgments.

4

That in the more than four years in which the Respondent had

been State’s Attorney, he had never filed a similar suit seeking

a personal judgment against an owner under Section 756.

Further, the Complaint charged that Section 756 of itself was

unconstitutional, since it granted an uncontrolled discretion to

the County Board of Cook County as to whom it might choose

to prosecute for a personal judgment. Secondly, it mandated that

the suit be filed for the “whole amount due for taxes and special

assessments”, Since personal liability for special assessments had

been declared unconstitutional by the Supreme Court of Illinois

(City of East St. Louis Vv. Illinois State Trust Co., 372 Ml. 120

[1939]), Section 756 mandated the prosecution of a suit based

on an unconstitutional statute.

That even if Section 756 be found constitutional, the Re-

spondent’s harassing administration of the act deprives Peti-

tioners of the rights, privileges and immunities guaranteed them

by the Constitution of the United States, and deprives them of

the equal protection of the laws and of due process under the

law.

STATUTES INVOLVED.

Petitioners base their case on the provisions of Title 28,

U. S. C., Section 1343(3). Respondent urges the prohibition

relative to taxes contained in Title 28, U. S. C., Section 1341.

REASONS FOR GRANTING THE WRIT.

The ruling of the United States District Court, affirmed by

the United States Court of Appeals, is in direct conflict with the

decisions of federal courts all over the country, as well as this

Supreme Court, and is the result of a complete misapprehension

of the thrust of the Complaint.

It is undenied that the Respondent-State’s Attorney, under

color of the State law (Section 756), has used the said Section

756, Chapter 120, Ill. Rev. Stats., for the purpose of selectively

5

discriminating against these Petitioners and in bad faith has

prosecuted these Petitioners, This is admitted by his Motion to

Strike and Dismiss the Complant. Respondent’s only defense

is that the District Court has no power under Title 28, U. S. C.,

Section 1341, to entertain the Complaint. But this is not so—

our case is not prohibited from federal intervention under Sec-

tion 1341. First of all, we are not contesting the tax as such;

we do not question the amount of the tax or the validity thereof;

we do not seek to stop the State from forfeiting the property for

non-payment of taxes, or selling the property at public sale as

provided by statute.

Our Complaint is directed to the selective, discriminatory use

of a statute which provides that the State may sue for personal

judgment against a property owner. It states that the Respondent

is guilty of an unconstitutional application of this act against

these Petitioners, and cites chapter and verse in support of our

contention, all of which is admitted by Respondent’s Motion

to Strike.

Section 1343(3) was designed specifically to grant federal

jurisdiction to intervene in such cases as the one presented here.

Respondent’s actions are a perfect example of what this Court

found obnoxious and unconstitutional in the case of Yick Wo v.

Hopkins, 118 U. S. 373-374 (the administration of an otherwise

constitutional act “with an evil eye and an unequal hand”).

The lower Courts both also rested on the proposition that the

Petitioners had not exhausted their administrative remedies,

although we showed, and there was no denial, that there were

no administrative remedies available to the Petitioners in this

situation. The only administrative remedies provided for in the

Revenue Act of the State of Lllinois relate only to the contesting

of a tax either in amount or as to its validity. No administrative

remedy is provided for the rectifying of an act such as

complained of here.

In taking refuge behind the provisions of Section 1341, the

United States District Court and the United States Court of

6

Appeals either were unaware of or chose to ignore the legion

of numerous decisions of both this Court as well as those of

other circuits as well, holding directly to the contrary.

Even though, arguendo, Section 756 of the Revenue Act be

held constitutional, it is the bad-faith employment of the act

for purposes of harassment which mandates federal jurisdiction.

Dombrowski v. Pfister, 380 U. S. 479 (1965). ©

A systematic undervaluation of other taxable property, the

effect of which is an unjust discrimination in taxation, will

sustain a federal case to enjoin the collection of the tax (Louis-

ville Trust Co. v. Stone, 107 Fed. 305), even if the State Court

could afford an adequate remedy.

The very case of Grandco Corp. v. Rochford, 536 F. 2d 197

(7th Circuit, 1976) on which the District Court relied on in its

Decision, permitted federal jurisdiction where the plaintiff

demonstrates official bad faith or harassment in the enforcement

of the statute.

As was said in the case of District of Columbia Transit System

v. Pearson, 149 Fed. Sup. 18:

“The statutory ban against injunction to restrain collection

of taxes is more honored in the breach than in the observ-

ance, and upon a showing of considerations that appeal

to the discretion of a court of equity, a suit for injunction

may be entertained.”

The Decision runs counter to that rendered in the case of

Levy v. Parker, 346 F. Sup. 897 (e.d. La. 1972), where the

same defense as here was interposed against a suit brought by

taxpayers challenging the distribution of state property tax relief

funds. There the Court held in sustaining the Complaint:

“If arbitrary discrimination by the state is demonstrated,

the mandate of the equal protection clause is applicable

without regard to the manner by which the discrimination

is achieved, and when a state law or practice is properly

challenged, it is the duty of the federal courts to measure

that action against the 14th Amendment.”

eh eR >

7

In the case of Bohler v. Calloway, 267 U. S. 479 (1925), it

was held:

“It is well settled that if the administration of the tax laws

of a state is shown to result in an intentional and systematic

discrimination against a complainant by a bill in the Fed-

eral Court, the Court may grant relief by injunction under

the state law without deciding the federal constitutional

question upon which jurisdiction of the bill is based.”

Particularly apt are the words of the Court in the case of

Taylor v. Louisville and Nashville R. R. Co., 88 Fed. 354,

364:

“We have before us a case in which the complaining tax-

payer and other taxpayers owning the same species of

property are taxed at a higher rate than the owners of other

species of property. This does not come about by legislative

discrimination but by the intentional and systematic disre-

gard of the law by those charged with the duty (of collec-

tion ).”

And in the case of Johnson v. Wells Fargo, 239 U. S. 234

(8th Cir. 1915), the Court said:

“Although a taxing statute, upon its face, may be unobjec-

tionable, its administration may, by adoption of unequal

method of valuation, be illegal.”

Consider the words of this Court in the case of Hillsborough

v. Cromwell, 326 U. S. 620, 623 (1946):

“The equal protection clause of the 14th Amendment

protects the individual from state action which selects him

out for discriminatory treatment by subjecting him to taxes

not imposed on others of the same class... and (P. 636)

while the charges of discrimination in the Complaint were

denied, the jurisdiction of the District Court is determined

by the allegations of the bill.”

And in the case of Spector Motor Service Co., Inc. v. Mc-

Laughlin, 323 U. S. 101 (2nd Cir. 1974), the Court, when

confronted with the defense of Section 1341, as attempted in

8

the instant case, said in a suit seeking to enjoin the collector of

a State tax:

“Section 1343(3) permits one to sue for deprivation of

any (sic) constitutional right . . . the court is charged with

the duty of treating Plaintiff's complaint with liberality.

Richardson vy. Civil Service Commission of the State of

New York, 387 F. Sup. 1267 (1971)”.

See also: Mayor, etc. of Jersey City v. Central R. Co., of

N. J., 212 F. 76 (3rd 1914)

Steffel v. Thompson, 415 U. S. 452 (1973)

Southern California Tel. Co. v. Hopkins, 13 F.

2d 814 (9th Cir.)

It is admitted by the Motion to Strike and Dismiss that there

is no plain, speedy and efficient remedy provided by Illinois

Courts under the Revenue Act against the acts complained of by

the Respondent. Urging as a defense that the Petitioners must

first pay the tax imposed before they can be heard is completely

beside the point, since we are not contesting the validity or the

amount of the tax in any way; and there is no provision for any

hearing by any administrative body or court under such cir-

cumstances as are brought by this Complaint. (U. S. v. Living-

ston, 179 F. Sup. 9 [1959]; Joiner v. City of Dallas, 380 F. Sup.

754 [1974]).

In the case of Yick Wo v. Hopkins, 118 U. S. 373-374, the

Court said:

“Though the law itself be fair on its face and impartial

in appearance , yet, if it is applied and administered by

public authority with an evil eye and an unequal hand so

as practically to make unjust and illegal discriminations

between persons in similar circumstances, material to their

rights, the denial of justice is still within the prohibition of

the Constitution.”

See also: Garrett v. Bamford, 538 F. 2d 63 (3rd Cir.

1976)

City of Wyandotte, 199 F. Sup. 582, 584 (1961)

Klim vy. Jones, 315 F. Supp. 109 (1970)

i PRAYER FOR WRIT OF CERTIORARI.

WHEREFORE, Petitioners pray that for the foregoing reasons,

this Court’s Writ of Certiorari should issue to review the Judg-

ment and Opinion of the United States Court of Appeals for

the Seventh Circuit.

Respectfully submitted,

BERNARD ALLEN FRIED,

134 North LaSalle Street,

Chicago, Illinois 60602,

ANdover 3-7875,

Attorney for Petitioners.

Al

APPENDIX.

UNITED STATEs District Court,

Northern District of Illinois

Eastern Division

Name of Presiding Judge, Honorable Thomas R. McMillen

Cause No. 77 C 2734 Date Dec. 9, 1977

Title of Cause Fried et al. v. Carey

Motion of defendant to dismiss the complaint is granted and

judgment is entered in his favor, with costs. (DRAFT)

Rule 58 entered.

MCMILLEN J.

A2

UNITED STATES DISTRICT COURT

Northern District of Illinois

Eastern Division

BERNARD ALLEN FRIED, ET AL.,

Plaintiffs,

ve. . == No. 77 C 2734

BERNARD CAREY,

Defendant. }

DECISION

Plaintiffs have filed a complaint seeking to enjoin the defend-

ant as State’s Attorney for Cook County, Illinois from pursuing

four lawsuits in the Circuit Court of Cook County to collect

property taxes. Plaintiffs also seek a declaratory judgment that

Ill, Rev. Stat. (1975), Ch. 120, §756 is unconstitutional. De-

fendant has filed a motion to dismiss which we will grant.

In the first place, this court is not empowered to enjoin, sus-

pend or restrain the collection of any State tax where a plain,

speedy and efficient remedy is available in the State court. 28

U. S. C. § 1341. This statute has been applied to actions for

declaratory judgment as well as actions for injunctions. Great

Lakes Dredge & Dock Co. v. Huffman, 319 U. S. 293 (1943).

Plaintiffs have not exhausted their State court remedy and

therefore have not shown that they lack a plain, speedy and

efficient form of relief there. Lacking such a showing, we cannot

entertain this complaint. 28 East Jackson Enterprises, Inc. V.

Cullerton, 523 F. 2d 439 (7th Cir. 1975), cert. den. 423 U.S.

1073 (1976), 551 F. 2d 1093 (7th Cir, 1977).

Secondly, we are not empowered to enjoin State proceedings

except under narrowly-stated conditions, 28 U. S. C. § 2283.

Although certain civil rights actions are exc‘apted from § 2283

A3

under Mitchum v. Foster, 407 U. S. 225 (1972), plaintiffs have

denied in their answering memorandum that their cause of

action is based on 42 U. S. C. § 1983. They have cited or

claimed no other exception under the foregoing statutory pro-

hibition.

Finally, the State courts apparently have not passed upon the

constitutionality of § 756, and therefore we should refrain from

attempting to do so. Grandco Corp. v. Rochford, 536 F, 2d

197 (7th Cir. 1976); Ahrensfeld v. Stephens, 528 F. 2d 193

(7th Cir, 1975).

Since our court is precluded by statute and by the rule of

comity from entertaining this case, there is no reason to go into

the merits of the complaint. Nevertheless, it is our opinion that

the defendant in his official capacity had the right and indeed the

obligation to file tax collection suits in the name of the People

of the State of Illinois and that plaintiffs have alleged no dis-

cernible reason why he should be prevented from doing so. He

is protected from liability by McDonald v. Illinois, 557 F. 2d

596 (7th Cir, 1977). Nor can we see any ground whatsoever

for doubting the constitutionality of § 756 which merely em-

powers the County Board to collect taxes and special assess-

ments, which it does through the offices of the defendant State's

Attorney. See People v. Kimmel, 323 Ill. 261, 268 (1926).

IT Is THEREFORE ORDERED, ADJUDGED AND DECREED that the

motion of the defendant to dismiss the complaint is granted, and

judgment is entered in his favor, with costs.

ENTER:

THOMAS R. MCMILLEN

Judge, U.S. District Court

Dated: Dec. 9, 1977

A4

UNITED STATES COURT OF APPEALS

For the Seventh Circuit

Chicago, Illinois 60604

Submitted: June 21, 1978

June 26, 1978

Before

Hon. WALTER J. CUMMINGS, Circuit Judge

Hon. WILLIAM J, BAUER, Circuit Judge ©

Hon. WILLIAM J. CAMPBELL, Senior District Judge*

)\ Appeal from the

United States Dis-

trict Court for the

BERNARD ALLEN FRIED, ET AL., Northern District of

Plaintiffs-A ppellants, Illinois, Eastern Di-

vision.

No, 78-1191 VS, P —_

BERNARD CAREY, ETC., No. 77-C-2734

Defendant-A ppellee. ae

Thomas R. McMillen,

Judge.

\

ORDER

This matter comes before the court on the filing of the briefs

by the parties and on the motion of the appellee for affirmance

without oral argument pursuant to Circuit Rule 15. On con-

sideration whereof, we GRANT the motion and AFFIRM the order

of the district court.

Plaintiffs-appellants, all owners of tax delinquent Illinois real

estate, brought an action in the district court asking that an

* The Honorable William J. Campbell, Senior District Judge of

the Northern District of Illinois, sitting by designation.

!

AS

injunction be issued against defendant Bernard Carey, State’s

Attorney of Cook County, in order to restrain him from bring-

ing any law suits against them under an Illinois statute which

allows suits to be brought for taxes on forfeited realty (JI. Rev.

Stat. ch. 120, § 756). Appellants allege that this statute is both

unconstitutional on its face and also as applied to them. Further,

they aliege that section 756 does not authorize the defendant

to bring suit but only grants the Couny Board this authority.

Appellants also sought the issuance of a declaratory judgment

finding section 756 unconstitutional and finding Carey's en-

forcement of it against them as a violation of their constitu-

tional rights under the fifth and fourteenth amendments.

The defendant-appellee moved to dismiss the action assert-

ing: (1) a failure of the complaint to state a claim upon which

relief may be granted; (2) the bar of 28 U. S. C. § 1341; and

(3) abstention. The motion was fully briefed and ultimately

granted by the district court on December 9, 1977. It is from

this judgment the plaintiffs appeal. The only issue raised on

appeal which this court will address is whether or not the dis-

trict court erred in finding that this action was barred by 28

U.S.C. § 1341.

The district court in its decision stated at the very outset:

“In the first place, this Court is not empowered to enjoin,

suspend or restrain the collection of any State tax where

a plain, speedy and efficient remedy is available in the

State Court. 28 U.S. C. § 1341.” (Mem. Opin. at 2.)

Appellants contend that the district court erred in finding that

they were seeking an injunction to restrain the collection of

Illinois taxes because the law suits filed by the defendant are

not regarded as suits to collect taxes but suits seeking to collect

personal judgments.’ They assert two Illinois cases as affirming

1. A pertinent portion of //l. Rev. Stat. ch. 120, § 756 provides:

Suits for taxes on forfeited realty or delinquent personally.

§ 275. The county board may, at any time, institute suit in a

civil action in the name of the People of the State of Illinois

(Footnote continued on next page.)

A6

their position. In Douthett v. Winter, 108 Til. 330 (1884), the

Illinois Supreme Court indicated that a suit seeking a personal

judgment based upon an underlying default on taxes was an

in personam proceeding and a sale of tax deliquent property was

an in rem proceeding. The decision was premised upon the deci-

sion of Douthett v. Kettle, 104 Ill. 356 (1882), which held that

a sale of land resulting from a deficiency judgment in a tax

sale, being an in personam action, foreclosed the application of

the two year redemption period for property sold directly at

a tax sale.

Appellants rely on these two cases only to obfuscate the

obvious. While the significance of whether a proceeding is in rem

or is in personam is important vis a vis a homestead exemption

(Winter, supra), a redemption right (Kettle, supra) it is not

an important distinction with regard to the purpose for which

a proceeding is initiated. Here, the State is quite clearly seeking

to obtain delinquent taxes in the only manner legally available

to it, that is by proceeding directly against the property owners.

In such a situation, the statutory language of 28 U.S. C. § 1341

prohibits interference by the federal courts.

The appellants also argue, without ever conceding that these

lawsuits are for the collection of taxes, there is no “plain, speedy

and efficient remedy . . . in the courts of [Illinois]” to contest

the unconstitutionality of section 756. Sacks Bros. Loan Co.,

Inc. v. Cunningham, No. 77-1729 (7th Cir. May 24, 1978);

28 East Jackson Enterprises, Inc. v. Cullerton, 523 F. 2d 439

(7th Cir. 1975), cert. denied, 423 U. S. 1073 (1976), aff'd on

rehearing, 551 F. 2d 1093 (7th Cir. 1977). In their brief and

complaint they devote little attention to explaining their position

except to assert that the only statutory procedures available are

those in which litigants “contest the imposition of the tax in any

way whatsoever.” They claim that since they have not refused

(Footnote continued from preceding page.)

in the circuit court for the whole amount due for taxes and

special assessments on forfeited property . . . and prosecute the

same to final judgment.

A7

to pay the taxes assessed against their property on account of any

invalidity or illegality of the assessment or levy, that the usual

procedure of paying the taxes under protest and claiming a

refund pursuant to Ill. Rev. Stat. ch. 120, § 675 is not available

to them.

It is apparent to this court that appellants have neither

exhausted their state remedies, as is required prior to the filing

of this action, nor have they exhausted their efforts in legal

research. In Neal Institute Co. v. Stuchhart, 281 Il. 526, 117

N. E. 1012 (1918) the Illinois Supreme Court indicated that

any defense which might be made in an action for delinquent

taxes (III. Rev. Stat. ch. 120, § 675) can be made under a sec-

tion 756 proceeding. Because the defenses which can be raised

under section 675 are plenary, with the one exception that the

real estate is exempt, appellants can present any and all claims

including those based on the federal constitution in the state

court action.

For the reason that this court finds that the injunctive relief

sought is barred by 28 U.S. C. § 1341? and because this statute

has been applied to actions for declaratory judgment as well as

actions for injunctions, Great Lakes Dredge & Dock Co. v.

Huffman, 319 U. S. 293 (1943), we find it unnecessary to

address the other issues presented by the appellants on appeal.

For these reasons, it is ordered that the motion for affirmance

without oral argument is GRANTED and the district court’s

order is AFFIRMED.

2. As was noted by this court in 28 East Jackson Enterprises

Inc. v. Cullerton, 551 F. 2d 1093, 1096 (7th Cir. 1977):

“This denial of jurisdiction is complete and applies regardless

of whether the tax complaint filed invokes a federal claim

alone or in conjunction with state claims. See Mande! y. Hutch-

inson, 494 F. 2d 364 (9th Cir. 1974) (in which it was held

that the jurisdictional bar of section 1341 was not avoided by

challenging state tax statute on federal grounds); see also

P. Bator, P. Mishkin, D. Shapiro and H. Wechsler, Hart &

Wechsler’s The Federal Courts & the Federal System, 978 (2d

ed. 1973). The only concern is whether or not there is an

adequate state court remedy for the federal claims.”