Petition — Cullerton v. Fulton Market Cold Storage Co.

In THE

Supreme Court of the Anited States

Ocroser Term, 1978

No %8-748

P, J. CULLERTON, et al.,

Petitioners,

VS.

FULTON MARKET COLD STORAGE COMPANY,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

BERNARD CAREY,

State’s Attorney of Cook County, Illinois,

500 Richard J. Daley Center,

Chicago, Illinois 60602,

(312) 443-5460,

Counsel for Petitioners.

Pavut P. Brmset, JR.,

Deputy State’s Attorney,

Chief, Civil Actions Bureau,

Henry A. Hauser,

Assistant State’s Attorney,

Of Counsel.

Midwest Law Printing Co., Chicago 60601, FInancial 6-3988

OO A A OPN DO AE NN ON es

TABLE OF CONTENTS

PAGE

I I icici ciisiatetictnieniniitbniicteininiclnpesigebatban 2

I cate iiataitiiaiiecycacictnindatiitniiniaineinaincansoeiaas 2

QUESTIONS PRESENTED 222. .eceecececeesecseneeeeee 2

STATUTORY PROVISIONS INVOLVED .................... 3

STATEMENT OF THE CASE a

REASONS FOR GRANTING THE WRIT:

! I

The Decision Of The Court Of Appeals Is In Con-

flict With The Rule Expressed By The Fifth Cir-

cuit In The Leading Case Of Bland v. McHann, 463

F.2d 21 (5th Cir. 1972), cert. denied, 410 U.S. 966

(1973) And Similar Cases From The Second And

Ninth Circuits Regarding The Effect Of The Anti-

Tax Injunction Statute Upon Damage Claims

Brought Under The Civil Rights Act ........................ ll

II

The Decision Of The Court Of Appeals Is In Con-

flict With This Court’s Decision In Great Lakes

Dredge And Dock Co. v. Huffman, 319 U.S. 293

I cose aladaieiccsape li aatinltiiisnatatiidinbitenieamenemenionnstateteascnane 15

III.

The Decision Of The Court Of Appeals Is In Con-

flict With This Court’s Holding in Holt v. Indiana

Manufacturing Co., 176 U.S. 68 (1900) That Con-

stitutional Challenges To A State Tax Assessment

Fail To State A Claim Under The Civil Rights ‘i

i achat ala liaiaendienibiininecetetaiinninimadnnemmnimicenecien

CONCLUSION 22

il

APPENDICES:

A—Opinion of the United States Court of Appeals

I Ta I IG io saiecbetettencaceerseecectsnccntntvasons la

B—Opinion of the United States District Court ........ 18a

C—Plaintiff’s First Amended Complaint .................... 23a

D—Defendant’s Motion to Strike and Dismiss .......... 34a

E—Defendant’s Motion to Dismiss .........................0-+- 35a

TABLE OF AUTHORITIES .

Cases

Alberty v. Daniel, 25 Ill. App. 3d 291, 323 N.E.2d 110

(1st Dist. 1974) NE Me EOD Se 5 De LES 5S 8

Askew v. Hargrave, 401 U.S. 476 (1971) ie ciigleieinadciahlaes 17

Bland v. McHann, 463 F.2d 21 (5th Cir. 1972), cert.

denied 410 U.S. 966 (1973) ...... ... 10, 11, 12

Clarendon Associates v. Korzen, 56 Ill. 2d 101, 306 N.E.

Bo, ee Reen aE

Edelman v. Jordan, 415 U.S. 651 (1974) 9

Evangelical Catholic Communion Ine. v. Thomas, 373

F.Supp. 1342 (D.Vt. 1973), aff’d, unpublished opinion

493 F.2d 1397 (2nd Cir. 1974) 13, 14, 19

Garrett v. Bamford, 538 F.2d 63 (3d Cir. 1976) ............ 12, 17

Goodfriend v. Board of Appeals, 18 Ill. App. 3d 412,

305 N.E.2d 404 (1st Dist. 1973)

Gray v. Morgan, 371 F.2d 172 (7th Cir. 1966) ............... 19

Great Lakes Dredge and Dock Co. v. Huffman, 319 U.S.

293 (1943) 10, 15, 17, 18, 19

Hargrave v. McKinney, 413 F.2d 320 (5th Cir. 1969) ..... 17

Hickmann v. Wujick, 488 F.2d 875 (2d Cir. 1973) ...... 10, 13

Holt v. Indiana Manufacturing Co., 176 U.S. 68 veg =

’ ’

Illinois Central Railroad Co. v. Howlett, 525 F.2d 178

(7th Cir. 1975), cert. denied 424 U.S. 976 (1976) ........ 19

iil

Kelly v. Springett, 527 F.2d 1090 (9th Cir. 1975) .... 10, 14, 15

LaSalle National Bank v. County of Cook, 57 Il. 2d 318,

Oe NE SOE I Sai nccac cic sechisstcescescsssonenveasenecevceevee 8

Lynch v. Household Finance Corp., 405 U.S. 538 (1972)

seteianiialasdlikabaiinh di aaissdigdiab liad tid Nadisciss chnicsticsens bntkecnssannovenvons 20, 21

Matthews v. Rogers, 284 U.S. 521 (1932) ...--cccccceessseee 17

Miller v. Bauer, 517 F.2d 27 (7th Cir. 1975) 0.0. 19

People ex rel. Korzen v. Fulton Market Cold Storage,

62 Ill. 2d 443, 343 N.E.2d 450 (1976) 20... eeeeeeeee

Snowden v. Hughes, 321 U.S. 1 (1944) 0. sesssesceeeeee 7

Tramel v. Schrader, 505 F.2d 1310 (5th Cir. 1975) ........ 17

28 East Jackson Enterprises, Inc. v. Cullerton, 523 F.

2d 439 (7th Cir. 1975), cert. denied 423 U.S. 1073,

reh. denied 424 U.S. 959 (1976), 2nd pet. reh. denied

551 F.2d 1093 (1976), cert. denied 434 U.S. 835 sate

ae ¥ Se

Tully v. Griffin, 429 U.S. 68 (1976) ....0.........ccccececcececeseeees 9, 22

Walker Process Equipment, Inc. v. Food Machinery

and Chemical Corp., 382 U.S. 172 (1965) 4

Other Authorities

a 3

I ce ee 3

a cssomen 3

Ch. 120, par. 578, Ill Rev. Stat. 1977 on ccccccsccccccsssssseeeeen 7

Ch. 120, par. 579, Ill. Rev. Stat. 1977 .cccccccccccccccccsseeeeeeee 7

Ch. 120, par. 594, Ill. Rev. Stat. 1977 .cccccccccccccssssesseseeeu 8

Ch. 120, par. 598, Ill. Rev. Stat. 1977 -ccccccccccsocso- co.

8

8

8

20

17

Ch. 120, par. 604, Tl]. Rev. Stat. 1977 .......cccccceccessessseeeees

Ch. 120, par. 675, Ill. Rev. Stat. 1977

Ch. 120, par. 716; Ill. Rev. Stat. 1977

Civil Rights Act of 1871

Federal Declaratory Judgment Act of BIE iiritpinichinnnss

In Tue

Supreme Court of the United States

Ocroser Term, 1978

No.

P. J. CULLERTON, et al,

Petitioners,

vs.

FULTON MARKET COLD STORAGE COMPANY,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Petitioners P. J. Cullerton, Thomas M. Tully, George

M. Keane, Bernard J. Korzen, Harry H. Semrow and

Seymor Zaban* respectfully pray that a writ of

certiorari issue to review the judgment and opinion of

the United States Court of Appeals for the Seventh

Circuit entered in this proceeding on August 7, 1978.

* Petitioner Cullerton was the Assessor of Cook County for

many years until he was succeeded in 1974 by the present

Assessor of Cook County, Thomas M. Tully. Petitioners

Semrow and Zaban are the present members of the

County Board of (Tax ax) A Appeals. Petitioners Keane and Korzen

are past members of that bo These petitioners will be

hereinafter referred to as the po assessment officials.

aniline

OPINIONS BELOW

The opinion of the Court of Appeals, not yet reported,

appears as Appendix A hereto. The opinion of the

District Court, not yet reported, appears as Appendix B

hereto.

JURISDICTION

The judgment of the Court of Appeals was entered on

August 7, 1978. This Court’s jurisdiction is invoked

under 28 U.S.C. § 1254(1).

QUESTIONS PRESENTED

1. Whether the Federal Anti-Tax Injunction Act of

1937 (28 U.S.C. § 1341) prohibits a civil rights action for

damages caused by the overassessment of real estate for

purposes of local taxation.

2. Whether principles of comity and federalism

require the District Court to abstain from a civil rights

action for damages caused by the overassessment of real

estate where there are adequate state anticipatory and

compensatory remedies.

3. Whether allegations of overassessment of real

estate for local taxation purposes, without more, state a

gin for relief under the Civil Rights Act (42 U.S.C.

1983).

—3—

FEDERAL STATUTES

PROVIDE IN PERTINENT PART

Title 28 U.S.C.

§ 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.

§ 13843. 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;

Title 42 U.S.C.

§ 1983. Civil action for deprivation of rights

Every person who, under color of any statute,

ordinance, 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

Constitution and laws, shall be liable to the party

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

proper proceeding for redress.

pe ae

STATEMENT OF THE CASE

This case presents the question whether the Federal

Anti-Tax Injunction Act (28 U.S.C. § 1341) and its

underlying policy prohibit a § 1983 civil rights action

against county assessment officials for damages arising

from alleged overassessment* of a cold storage ware-

house.

The case is presented upon the pleadings only, since

the District Court granted petitioners’ motion to dis-

miss. The well-pleaded allegations of the amended

complaint thus form the factual basis for the determina-

tion of the issues. Walker Process Equipment, Inc. v.

Food Machinery and Chemical Corp., 382 U.S. 172, 174-

75 (1965).

The respondent (sometimes hereinafter referred to as

taxpayer) is an Illinois corporation which owns a cold

storage warehouse subject to the local real estate tax

assessed by the petitioning county assessment officials

during the years 1958 through 1973. The taxpayer

alleges that its property was assessed at 100% of its fair

market value while other property in Cook County

was assessed at between 20% to 50% of fair market

value. (Pars. 12-14, Amended Complaint; a copy of the

taxpayer’s Amended Complaint, taken from the Appen-

dix filed in the Seventh Circuit, is included herewith as

appendix C.)

The following damage is alleged in the amended

complaint, par. 15:

The foregoing illegal acts and course of conduct

have damaged plaintiff. Such damages include,

* The term “overassessment” in this petition is used in the

gc sense of a taxpayer a compelled to pay more than

is appropriate share of taxes due to erroneous valuation of

= aa property or other property in the taxpayer’s

istrict.

—5—

inter alia, the amount (over $60,000) by which the

tax levy for 1969 on plaintiff's property exceeded

the levy which would have obtained but for such

acts and conduct, the sums expended by plaintiff in

the years from 1958 to 1974 in seeking redress from

such acts and conduct, and the dislocation to

plaintiffs business resulting therefrom.

and the following relief requested:

WHEREFORE, plaintiff prays:

(a) For judgment against the defendants, and

each of them, for $60,000 plus the sums expended

by plaintiff in the years 1958 through 1974 in seek-

ing redress from the acts and conduct of defen-

dants, plus the damage to plaintiff's business

resulting therefrom, plus its cost.

(b) For punitive damages in the amount of

$250,000.

(c) For such other and further relief as may be

just.

The county assessment officials moved to dismiss the

amended complaint. Those motions are set out herein as

appendices D and E. Those motions set up the following

grounds in opposition to the taxpayer’s amended com-

plaint:

1. Real estate tax assessments do not fall within

the purview of 28 U.S.C. § 1343 and 42 U.S.C. §

1983.

2. The court should abstain from jurisdiction.

3. Jurisdiction is barred by 28 U.S.C. § 1341.

4. Failure to state a claim.

5. Failure of the amended complaint to present

a substantial federal question.

6. The amended complaint as to tax year 1969

was barred by the final decision of the Illinois

Supreme Court in People ex rel. Korzen v. Fulton

Market Cold Storage Co., 62 Ill. 2d 448, 343 N.E.2d

450 (1976)

7. The amended complaint failed to state a claim

upon which relief may be granted, to wit: the

assessment practices challenged by the plaintiff are

neither the product of invidious discrimination, nor

—§—

are they based upon an unreasonable classification

of property for the purposes of taxation.

In ruling on the motions the District Court stated:

From an examination of the amended complaint, it

appears that plaintiff is asking this court to inter-

ject itself into the realm of state procedures of taxa-

tion, to find that the manner in which assessments

were made were illegal, and to order relief in viola-

tion of principles underlying 28 U.S.C. § 1341.

After consideration of the motions and briefs of the

parties, the court concludes that plaintiff's amended

complaint must be dismissed.

Appendix B, at 2la

and,

Therefore, in the judgment of this court, the prin-

ciples underlying enactment of 28 U.S.C. § 1341

apply to bar this suit. Plaintiff seeks relief in

this court without having availed itself to all plain,

speedy, and efficient remedies provided by Illinois

administrative and judicial procedures.

Appendix B, at 22a

The taxpayer appealed to the Court of Appeals for the

Seventh Circuit, which reversed. In ruling on the issue

the Court of Appeals stated:

A federal court injunction or declaratory judgment

would not only undermine and jeopardize a state’s

ability to collect its revenue but would also seriously

damage the delicate balance inherent in our

federalistic system of government.

These concerns are not present in a suit for

damages.

Appendix A, at 12a

A close and fair reading of the taxpayer’s amended

complaint discloses three factors which set it apart from

other § 1983 damage actions and from the usual tax in-

junction suit.

First, the amended complaint has as its sole subject

matter the alleged overassessment of the taxpayer’s

oo oe

property. The taxpayer fails to allege that the

“discrimination” to which it concludes it is subject is

based on anything other than overassessment of its real

estate. This conclusion arises from the fact that the

plaintiff is a corporation, and that the property involved

is a cold storage warehouse. Usual notions of discrimina-

tion on the basis of a plaintiff's sex, race, religion or

other characteristic simply do not apply to cold storage

warehouses. This is so even though the taxpayer has cast

the amended complaint in the grand conclusions of “in-

vidious” and “systematic” discrimination. This Court has

often looked past such unsupported and unwarranted

pleader’s conclusions in the past, Snowden v. Hughes,

821 U.S. 1, 9-10 (1944), cited in 28 East Jackson

v. Cullerton, 523 F.2d 439, 441 n.2 (7th Cir. 1975),

and should do so now. In fact, the amended com-

plaint seeks compensatory damages in the form of a re-

fund, costs of “...seeking redress” and “business dis-

location”. It is clear that the taxpayer’s case is bound up

totally in an attempt to set right the alleged overassess-

ment of its property. No purposeful or intentional dis-

crimination is alleged other than the assessment iself. It

is this factual pattern which takes the case outside the

usual civil rights claim, and requires dismissal under

Holt v. Indiana Manufacturing Co., 176 U.S. 68

(1900).

Secondly, the amended complaint fails to allege resort

to the Illinois remedies available to correct an

overassessment of real estate.*

* Illinois provides at least the following remedies to a tax-

payer whose real estate is over ,

_1. Administrative, pre-assessment—The assessor cannot

increase a real estate assessment in a non-quadrennial year

without first giving the taxpayer notice of such proposed

increase and right to be heard thereon. See Ch. 120, te

578, 579 Ill. v. Stat. 1977; ocgriena v. Board o

Appeals 18 Ill. App. 3d 412, 305 N.E.2d 404 (1st Dist.

(Footnote continued on following page)

—S-—

Thirdly, the amended complaint fails to allege that

the remedies provided by Illinois law are not plain,

speedy and efficient within the meaning of the Federal

Anti-Tax Injunction Act, and the many cases inter-

* continued

2. Administrative post-assessment—The assessor has

discretion upon application by the taxpayer to offer a cer-

tificate of error in certain situations. See Ch. 120, par.

604, Ill. Rev. Stat. 1977.

3. Administrative—assessment review—Prior to issu-

ance of the tax bills, the Board of Appeals of Cook County

has statutory power to review assessments and order them

corrected. See Ch. 120, pars. 594, 598, Ill. Rev. Stat. 1977;

People ex rel. Korzen v. Fulton Market Cold Storage, 62 Il.

2d 443, 343 N.E.2d 450 (1976).

4. Statutory legal remedy—With payment under oi

test and exhaustion of administrative remedies, a tax-

ayer may file an objection to the collector’s application

or judgment and sale of delinquent real estate. The cir-

cuit court sses the power in this proceeding to deter-

mine whether the assessment is correct. See Ch. 120,

pars. 675, 716. Ill. Rev. Stat. 1977; LaSalle National Bank

v. County of Cook, 57 Ill. 2d 318, 312 N.E. 2d 252 (1974).

5. Injunctive Relief—A taxpayer may obtain injunctive

relief when the legal remedy is unavailable. Clarendon

Associates v. Korzen, 56 Ill, 2d 101, 306 N.E.2d 299 (1973);

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

7th Cir. 1975); cert. denied 423 U.S. 1073 (1976).

og opinion upon Denial of Rehearing, 551 F.2d

1093 (7th Cir. 1976) cert. denied 434 U.S. 835 (1977).

6. The remedies available to a taxpayer in Illinois

would appear to include a 42 U.S.C. § 1983 claim which

could be appended to the taxpayer’s claim for a refund in

the state court. Ch. 120, pars. 675, 716, Ill. Rev. Stat. 1977.

The Illinois Appellate Court for the District in which the

taxpayer’s property is located has stated that,“ ... the

courts of the State of Illinois have concurrent jurisdiction

with the Federal courts to hear claims founded upon

alleged violations of 42 U.S.C. 1983.” Alberty v. Daniel, 25

Ill. App.3d 291, 295, 323 N.E.2d 110 (1st Dist. 1974).

2 een er at

ewe Soar

=

preting its provisions.* It is, of course, not surprising

that the taxpayer failed to assert the latter two points

since to do so would have, under its theory of the case,

impliedly admitted that the Anti-Tax Injunction statute

was applicable to its § 1983 damage action.

The county assessment officials contend that this case

presents “discrimination” solely in terms of overassess-

ment; is devoid of pumposeful or systematic discrimina-

tion as to race, sex, or other characteristics; seeks

damages in terms of refund and costs of suit against

local tax officials**; and fails to allege resort to Illinois’

plain, speedy and efficient remedies. This case, it is

respectfully submitted, is one which comes clearly

within ambit of the Anti-Tax Injunction Act. If not, then

Illinois taxpayers are enabled, by the simple strategem

of a § 1983 damage action, to evade or abandon the

panoply of administrative, legal and injunctive remedies

provided by Illinois in favor of the newly created federal

forum. The ruling of the court below thus presents the

clear prospect of a vastly increased District Court

caseload composed mainly of cases which have hereto-

fore been litigated in the courts of Illinois. It is obvious,

too, that such a jurisdictional dislocation of cases cannot

help but diminish the respect to which Illinois’ remedies

are entitled.

* See, 28 East Jackson Enterprises, Inc. v. Cullerton, 523

F.2d 439 (7th Cir, 1975), cert. denied 423 U.S. 1078, reh.

denied 424 U.S. 959 (1976); 2nd Fa reh. denied 551 F.2d 1093

197e eae 434 U.S. 835 (1977); Tully v. Griffin, 429

** While the amended complaint seeks personal judgments

against the various named county assessment officials, it is

clear under the circumstances of this case that funds to satisfy

such judgments will come from the county treasury. This Court

has recognized this governmental fact of life in Edelman v.

Jordan, 415 U.S. 651 (1974), a case which, of course, does not

apply directly to county officials.

—19—

REASONS FOR GRANTING THE WRIT

The decision of the Court of Appeals is in conflict with

the rule expressed by the Fifth Circuit in the leading

case of Bland v. McHann, 463 F.2d 21 (5th Cir. 1972),

cert. denied, 410 U.S. 966 (1973) and similar cases from

the Second and Ninth Circuits regarding the effect of

the Anti-Tax Injunction Act upon damage claims

brought under the Civil Rights Act.*

The decision of the Court of Appeals is in conflict with

this Court’s decision in Great Lakes Dredge and Dock Co.

v. Huffman, 319 U.S. 293 (1943).

The decision of the Court of Appeals is in conflict with

this Court’s holding in Holt v. Indiana Manufacturing

Co., 176 U.S. 68 (1900) that constitutional challenges to

a state tax assessment fail to state a claim under the

Civil Rights Act.

* These cases include Hickmann v. Wujick, 488 F.2d 875

ney 1973); Kelly v. Springett, 527 F.2d 1090 (9th Cir.

Se

ee ee

—

I

THE DECISION OF THE COURT BELOW IS IN CON-

FLICT WITH THE RULE EXPRESSED BY THE

FIFTH CIRCUIT THAT DAMAGE ACTIONS UNDER

THE CIVIL RIGHTS ACT ARE WITHIN THE

PROHIBITION OF THE ANTI-TAX INJUNCTION

ACT.

The court below correctly and clearly characterized

the issue as “... whether 28 U.S.C. § 1341 or its un-

derlying policy considerations bar the plaintiff's § 1983

suit for damages.” Appendix A, at 3a. However, the

statement immediately following, that “. . . it appears

that no other court has ever directly addressed itself to

this precise question.” is clearly incorrect.

The Fifth Circuit has, in its leading decision of Bland

v. McHann, 463 F.2d 21 (5th Cir. 1972), ruled that“...

it is the duty of federal courts, in actions for the refund

of state taxes, to defer to state administrative and

judicial remedies where the state remedy is ‘plain,

speedy and efficient’.” 463 F.2d at 27-28. As will be

demonstrated later, this rule appears to be supported by

the weight of authority and by the force of the logic

behind § 1341.

The threshold matter of the characterization of

the claim needs clarification since the taxpayer main-

tained below that the amended complaint did not

seek a “refund” but rather “tort damages.” The Court of

Appeals appears to have accepted this distinction sub

silentio, since the Bland case was cited for the proposi-

tion by the county assessment officials but ignored by the

court below. However, semantic debate is unnecessary

because of the clear facts of Bland v. McHann. In that

case certain black property owners filed suit alleging

racial discrimination in their real estate tax

assessments. The court noted that “Taxpayers also

sought a money judgment amounting to a full return

plus interest of previously collected ad valorem taxes

which were alleged to be unconstitutionally and dis-

criminatorily assessed.” 463 F.2d at 23, n.2.

It is clear that the term “refund” used in Bland v.

McHann is not limited simply to a return of money

authorized under state law,* but rather includes the

full scope of relief which a federal court may find ap-

propriate in repairing the damage done to a taxpayer

whose property is overassessed. Therefore Bland v.

McHann squarely decided that the Federal Anti-Tax In-

junction Act foreclosed not only the equitable remedy

of injunction and anticipatory remedy of declaratory

judgment but also the compensatory remedy of

damages.

To permit the taxpayer to bifurcate its claim for relief

by affording it the strategem of foregoing equitable,

anticipatory or compensatory relief available in the state

court, with the later filing of a federal damage action to

recoup “tort damages” stands the legislative intent of

§ 1341 on its head. If taxpayer’s “tort damage” theory

has any force, then § 1841 has no meaning at all.

The concern expressed by the Court of Appeals that

application of the Anti-Tax Injunction Act would

immunize the county assessment officials from civil

rights violations confuses the nature of this action,

which is based entirely upon assessment, with an action

alleging a purposeful attempt to discriminate on the

° ane cause of this confusion, which is injected into the case

by the taxpayer, may well derive from the pre-1937 practice

invoking diversity jurisdiction to assert refund claims

founded on state tax law. See Garrett v. Bamford, 588 F.2d

68, 66 (3d Cir. 1976).

PP

—13—

basis of sex, race, religion, or politics, which is clearly

not alleged in the amended complaint. There is no im-

munity for tax assessors who employ assessment

machinery to carry out purposeful discrimination. But

that is simply not the case here.

A rule identical to Bland v. McHann has been

developed independently by the Second Circuit. In

Hickmann v. Wujick, 488 F.2d 875 (2d Cir. 1973) the

Court of Appeals for the Second Circuit ruled on a tax

exemption case seeking “... declaratory judgment,

damages and injunctive relief... .”. Jd. at 876. The Sec-

ond Circuit stated:

We concluded in American Commuters Associa-

tion v. Levitt, 405 F.2d 1148, 1151 (2 Cir. 1969), that

“when there are adequate state remedies available,

Section 1341 means what it so plainly says and that

federal jurisdiction is still precluded by it”. Basing

a complaint upon alleged violation of civil rights, 28

U.S.C. § 1843(8) and 42 U.S.C. § 1988 or of the

Federal Constitution will not avoid the prohibition

contained in Section 1341.

Hickmann, at 876.

Evangelical Catholic Communion Inc. v. Thomas, 373

F Supp. 1342 (D.Vt. 1973) aff'd, unpublished opinion 493

F.2d 1897 (2nd Cir. 1974) presents a clear example of

the conflict which the decision of the Court of Appeals

for the Seventh Circuit has created. The Thomas case

was “. . . brought to challenge the assessment of local

property taxes against property claimed by the plaintiff

to be entitled to exemption from taxation by virtue of its

religious use.” Jd. at 1343.

The District Court ruled that § 1341 clearly barred the

injunctive and declaratory portions of the § 1983 action.

Regarding the taxpayers’ refund claim the District

Court stated:

Next, plaintiffs seek reimbursement from the

town of Newbury for the taxes they paid under the

challenged assessments from 1969 through 1971.

This aspect of their claim is also barred by 28

U.S.C. § 1341. We are in accord with the cogent opin-

ion of the Fifth Circuit Court of Appeals in Bland

v. McHann, 463 F.2d 21, 25-28 (5th Cir. 1972), that

under § 1341 “it is the duty of federal courts, in ac-

tions for the refund of state taxes, to defer to state

administrative and judicial remedies where the

— is ‘plain, speedy and efficient.’ ” Jd. at

7-28.

Evangelical Catholic Communion, at 1344.

The court further stated that:

Finally, the plaintiffs seek additional damages

totaling $150,000.00. It is elementary that con-

stitutional rights must be found to have been

abridged in order for damages to be recovered in a

civil rights action. Thus the plaintiffs in this action

cannot recover damages without a determination by

this court that the taxation of their Newbury

property was effected in violation of their con-

stitutional rights. If we were to make such a deter-

mination, we would, in effect, be issuing a

declaratory judgment regarding the constitutionali-

ty of the tax levied on the plaintiffs. As the court is

prohibited from issuing such a declaratory judg-

ment, as indicated earlier, the court is also Re

ed as a matter of law from adjudicating the plain-

tiffs’ damages claims. This final segment of their

complaint, therefore, must be dismissed.

Id. at 1344.

The rule followed by the District Court was so well es-

tablished that the Court of Appeals for the Second Cir-

cuit did not even view it necessary to publish its opinion

affirming the District Court. 498 F.2d 1897 (2nd Cir.

1974).

The Ninth Circuit’s continued acceptance of the rule

in Bland is set forth in Kelly v. Springett, 527 F.2d 1090

(9th Cir. 1975). The court stated:

—-= ~

—15—

Bland v. McHann, 463 F.2d 21 (CA5 1972), cert.

denied 410 U.S. 966, 93 S.Ct. 1488, 35 L.Ed.2d 700

(1973), stands for the tenet that § 1341 applies to

suits for refunds, as well as to anticipatory relief.

The Bland court also held that an action for refund

was an integral part of state tax administration and

that there was not reason to bifurcate the state

remedy. Jd. at 27. We agree with both conclusions.

The Bland decision has been recently affirmed in

United States v. State Tax Comm'n, 505 F.2d 633,

638 (CA5 1974). Interestingly enough, we cited

Bland with approval in Mandel v. Hutchinson, 494

F.2d 364, 367 (CA9 1974), where we held that the

California tax refund procedure provides a plain,

speedy and efficient remedy. It is true that

me action is brought under 42 U.S.C.

1983, the jurisdictional statute of which is 28

S.C. § 1843(3) and, consequently, does not require

rior exhaustion of remedies. However, where

1343(3) actions are confronted with the ke

provision, the latter control and exhaustion of state

remedies is required. Bland v. McHann, supra, bp.

24-25; Mandel v. Hutchinson, supra, p. 367. Cf.

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

542-543, n. 6, 92 S. Ct. 1118, 31 L.Ed. 424 (1972).

Kelly, at 1094.

This case clearly demonstrates that the Seventh Cir-

cuit is out of step with other Circuits on a question

of law vital to both federal and state courts.

THE DECISION OF THE COURT OF APPEALS IS IN

CONFLICT WITH THE DECISION OF THIS COURT

IN GREAT LAKES DREDGE & DOCK CO. V. HUFFMAN,

319 U.S. 293 (1943).

The county assessment officials suggest that review

by this Court is warranted because the court below mis-

perceived the letter and the spirit of the Great Lakes

case.

—16—

In its decision the court below stated:

After reviewing the statute, its legislative history

and significant cases we can find no evidence which

would indicate that § 13841 was directed at damage

actions as well as equitable actions. Clearly if Con-

gress had intended to prohibit all federal court

relief in state tax matters, it could have done so.

Congress, however, did not address the subject of

damage actions. Congress thus did not give state

tax officials absolute immunity for acts committed

in their official capacity. Congress only prohibited

certain specific remedies which due to their nature

are highly disruptive of state proceedings. Quite

clearly, if a county or state tax official intentionally

and unjustifiably raised an individual’s property

assessment merely because of the individual’s race,

ethnic background or political affiliation, the of-

ficial could be liable for damages under § 1983 for

the misuse of his authority.

Appendix A, at l4a

The error of the foregoing analysis is that it inflates

the taxpayer’s claim here, which is one of overassess-

ment, to a constitutional dimension (such as a claim

based on race, politics or ethnic background) and then

supposes that the county assessment officials seek im-

munity from such wrongful acts. It is clear that the

facts of this case do not implicate highly valued and

protected rights limiting discrimination based on

race, politics or national origin. Rather the county

assessment officials maintain that where there is

overassessment, Illinois provides a system of legal and

equitable remedies for the adjustment of such claims.

Far from being immune from such claims, the county

spends substantial amounts of time and resources on

such tax matters, and stands ready to remedy the

damage of an overassessment. It is clearly not the posi-

tion of these county officials that they can wield the tax

assessment or collection power in a manner which inten-

tionally violates rights of persons to freedom from dis-

crimination based on race, sex, religion, politics or other

grounds. But that is not the case presented to the Court

of Appeals or to the District Court. The case here is for

overassessment of a corporately owned cold storage

warehouse, and nothing else. If that claim can be

litigated as a tort damage claim under § 1983, then why

not overassessment of any parcel of property in Cook

County?

Great Lakes Dredge and Dock Co. v. Huffman, 319 U.S.

293 (1943) militates against such a rule. Many cases trace

the narrowing of federal equity jurisdiction in state tax

cases effected by Matthews v. Rogers, 284 U.S. 521 (1932);

the rise of the use of diversity and federal question

jurisdiction to delay payment of state taxes; and the con-

sequent limitation set by Congress on such actions by

the passage of the Federal Anti-Tax Injunction Act of

1937 (28 U.S.C. § 1841).* However it was the passage of

the Federal Declaratory Judgment Act of 1934, and con-

sequent attempts by state taxpayers to avoid the bar of

the Anti-Tax Injunction Act which formed the back-

ground for the Huffman decision. This Court said

that:

* See Garrett v. Bamford, 538 F.2d 63, 66-67 (3rd Cir. 1976)

held § 1341 inapplicable to racially discriminatory assessment

methods because Pennsylvania law presented no“. . . plain,

speedy and efficient remedy” for such a challenge; Tramel v,

Schrader, 505 F.2d 1310, 1315-16 (5th Cir, 1975) held § 1341

applicable to § 1983 suit to enjoin “special assessment” since

such was a tax, and remedies were acequate to challenge it.

Hargrave v. McKinney, 413 F.2d 325-26 (5th Cir, 1969)

held § 1341 inapplicable to § 1983 for declaration of effective-

ess of Flori tex rollback statutes. But see Askew ».

argrave, 401 v. . 476 (1971) vacating subsequent three

Judge court ruling in favor of taxpayer so that Florida courts

could rule on state claims.

—jg—

The earlier refusal of federal courts of equity to

interfere with the collection of state taxes unless the

threatened injury to the taxpayer is one for which

the state courts afford no adequate remedy, and the

confirmation of that practice by Congress, have an

important bearing upon the appropriate use of the

declaratory judgment procedure by the federal

courts as a means of adjudicating the validity of

state taxes.

319 U.S. at 299.

Thus this Court tied the use of the “new form of

procedure”, declaratory judgment, to the familiar rule

applied in cases where equitable relief was sought

against the collection of a state tax. The Court stated the

rationale for this rule clearly:

The considerations which persuaded federal

courts of equity not to grant relief against an alleg-

ed unlawful state tax, and which led to the enact-

ment of the Act of August 21, 1937, [Federal

Anti-Tax Injunction Act] are persuasive that relief

by way of declaratory judgment may likewise

be witheld in the sound discretion of the court.

With due regard for these considerations, it is

the court’s duty to withold such relief when, as

in the present case, it appears that the state

legislature has provided that on payment of any

amt tax to the appropriate state officer, the

a may maintain a suit to recover it back. In

such a suit he may assert his federal rights and

secure a review of them by this Court. This affords

an adequate remedy to the taxpayer, and at the

same time leaves undisturbed the state’s ad-

ministration of its taxes.

319 U.S. at 300-01 [Insert for clarity].

The county officials submit that the very same state

interests and concerns which inhere in a declaratory

judgment action regarding state tax liability also exist

in a § 1983 damage action.

—19—

There are two specific reasons why the rule of Great

Lakes as to declaratory judgments should apply to § 1983

damage claims for overassessment. First this Court

recognized that the Declaratory Judgment Act of 1934

did not simply authorize “. .. a declaration of rights

.. although no further relief be asked ... .”. Great

Lakes at 300. If this were the case, the potential for

direct harm to the state’s tax system, though great,

would be limited. However, this Court clearly pointed

out that, in the words of the Declaratory Judgment Act,

“Further relief based on a declaratory judgment or

decree may be granted whenever necessary and proper.”

Id. at 300 (Emphasis supplied). Thus the question of

damages is subsumed into the holding of Great Lakes.

Secondly, it has been recognized that an award of

damages based on overassessment implies a declaration

of unconstitutionality. This is precisely the holding of

Evangelical Catholic Communion, Inc. v. Thomas, 373

F.Supp. 1342, 1344 (D.Vt. 1973); aff'd unpublished opin-

ton 498 F.2d 1897 (2nd Cir. 1974).

The county assessment officials submit that the

departure of the Seventh Circuit from the rule in Great

Lakes warrants review by this Court.*

* Prior to oe p ruling: ip ¢ in ee case at bar the Seventh Circuit

bes adhered closely Great Lakes holding. See ray By

yd ae 871 F.2d 172 (i Cir. 1966); Miller v. Bauer, 517

27 (7th Cir. 197 Illinois Central Railroad ad Co. v.

Hilt 98 F.2d 178 ( th Cir. 1975), cert. denied 424 U.S.

—20—

Ill.

THE DECISION OF THE COURT OF APPEALS IS

CONTRARY TO THIS COURT’S HOLDING IN HOLT v.

INDIANA MANUFACTURING CO., 176 U.S. 68 (1900)

THAT CONSTITUTIONAL CHALLENGES TO A

STATE TAX ASSESSMENT FAIL TO STATE A CLAIM

UNDER THE CIVIL RIGHTS ACT.

The Cook County assessment officials maintain that

there is a “special class of cases” represented by

Holt v. Indiana Manufacturing Co., 176 U.S. 68 (1900),

which hold that the Civil Rights Act is not applicable in

cases involving “. .. constitutional challenges to the

collection of state taxes.” See Lynch v. Household

Finance Corp., 405 U.S. 588, 542 n.6 (1972).

The facts in Holt and the case at bar are startlingly

similar. In Holt the local tax officials assessed the per-

sonal property of the Indiana Manufacturing Co. for the

purposes of taxation. The corporation maintained that

the value of the property was solely represented by cer-

tain patents allegedly not subject to taxation. The nisi

prius court, the Federal Circuit Court for the District of

Indiana, entered a decree of injunction against the

collection of the tax.

In ruling on the issue of jurisdiction, this Court

referred to the provisions of the Civil Rights Act of

1871, the predecessor to 28 U.S.C. § 18438(8) and 42

U.S.C. § 1983, and stated:

“Assuming that they are still in force, it is suf-

ficient to say that they refer to civil rights only, and

are inapplicable here.” Holt, 176 U.S. at 72.

The Court ruled finally that, while federal question

jurisdiction was asserted, the jurisdictional amount was

not pleaded. The lower court’s ruling was therefore

reversed,

ai liiinse

These county assessment officials specifically dis-

avow any argument as to the applicability of the Civil

Rights Act based upon the supposed distinction between

personal rights, as against property rights, since the

argument was clearly and soundly rejected in Lynch v.

Household Finance Corporation, 405 U.S. 538 (1972).

However, Holt is still good civil rights decisional law on

the question whether overassessment alone, and without

implication of racial, sexual, religious, ethnic or political

discrimination, states a civil rights claim. We contend

that mere overassessment, even if systematic in the sense

that all assessments of real estate are organized, does

not state a claim under 42 U.S.C. § 1983. It should be

clear that “garden variety” overassessment claims were

not what concerned the Congress when it passed the

civil rights act.

It is submitted that the foregoing conceptual approach

to the claim of overassessment will protect state tax

r nedies from unpredictable changes in a body of civil

rights law which is clearly aimed at solving different,

difficult problems presented in our society. Viewed in

this light, even if 28 U.S.C. § 1841 were inapplicable,

the claim of overassessment itself would be rejected on

the .basis of Holt.

=- =

CONCLUSION

This Court has recently stated in Tully v. Griffin,

429 U.S. 68 (1976) that “A federal court is under

an equitable duty to refrain from interfering with a

State’s collection of its revenue except in cases where

an asserted federal right might otherwise be lost.”

The case at bar alleges an overassessment of property

for which the State of Illinois has provided plain, speedy

and efficient remedies. To hold, as did the Court of

Appeals for the Seventh Circuit, that § 1341 is in-

applicable to a § 1983 damage action arising out of an

overassessment constitutes just such an interference, and

snould be reviewed by this Court. For the foregoing

reasons, a writ of certiorari should issue to review the

» judgment and opinion of the Seventh Circuit.

Respectfully submitted,

BERNARD CAREY,

State’s Attorney of Cook County, Illinois,

500 Richard J. Daley Center,

Chicago, Illinois 60602,

(312) 443-5460,

Counsel for Petitioners.

Pau. P. Breese, JR.,

Deputy State’s Attorney,

Chief, Civil Actions Bureau,

Henry A. Havser,

Assistart State’s Attorney,

Of Counsel.

November 3, 1978

APPENDIX

~a\

—la—

APPENDIX A

In the

Gnited States Court of Appeals

SF oc the Seventh Circuit

No. 77-2133

FULTON MARKET COLD STORAGE COMPANY,

Plaintiff-Appellant,

P. J. CULLERTON, et al.,

Defendants-A ppellees.

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 74-C-5—George N. Leighton, Judge.

ARGUED FEBRUARY 15, 1978—DECIDED AUGUST 7, 1978

Before SWYGERT and TONE, Circuit Judges, and SHARP*,

Istrict Judge.

SHARP, District Judge.

I

On January 2, 1974 Fulton Market Cold Storage

Company (“Fulton”) filed a civil rights damage action

against the Cook County Assessor under 42 U.S.C.

Bsr: and its jurisdictional counterpart 28 U.S.C.

1343(3). Later Fulton amended its complaint and

* The Honorable Allen Sharp, United States District Court

fer the Northern District of Indiana, is sitting by designation.

—2a—

added a number of defendants and counts. In its

amended complaint Fulton, a Cook County Illinois

property owner, seeks actual and punitive damages for

injuries allegedly inflicted upon it by county and state

taxing officials. Fulton charges that these defendants,

individually and as parties to a continuing conspiracy,

acted and combined under color of law to deprive it of

its rights under the due process and equal protection

clauses of the Fourteenth Amendment of the United

States Constitution, the due process provisions of the

Illinois Constitutions of 1870 and 1970, Article IX,

Section 1 of the Illinois Constitution of 1870, and various

rovisions of the Illinois Revenue Act, 120 Ill. Rev. Stat.

Kg 482 et seq.

Specifically, Fulton alleges that from 1958 to 1973, the

defendants have systematically, knowingly, intentional-

ly, fraudulently and invidiously assessed its property at

levels other than permitted by law and greatly in excess

of the levels at which property in Cook County was

generally assessed in those years. Fulton alleges that in

1968 and 1969 its property was deliberately assessed at

two and one-half times the level at which property was

nerally assessed in Cook County in those years.

ulton’s other allegations charge that the defendants’

system of illegal valuations and discriminatory assess-

ments has been widely, wilfully and purposefully

practiced in Cook County and has worked substantial

injury upon Fulton.

The defendants fall into three groups: W) Cook

County Assessors P. J. Cullerton and Thomas M. Tully

(“the Assessor Defendants”) who, by statute, had the

duty to assess real property in Cook County; (2) Cook

County Board of Appeals members (“the County Defen-

dants”) who, by statute, had the duty to review and

order corrected unlawful assessments brought before

them on — and (3) Directors of the Illinois

Department of Revenue and the Illinois Department of

Local Government Affairs (“the State Defendants”) who

by statute, had the duty to equalize the total assessed

valuations of the several counties so that such total

assessed valuations as equalized equaled the full cash

value of the property subject to assessment within the

—38a—

several counties and the duty to order a reassessment for

any year in which they found that the assessments in

og county were not in substantial compliance with the

aw.

For relief, Fulton’s amended complaint prays for

$60,000 plus the sums it has expended in the years 1958

through 1974 in seeking redress from the acts and

conduct of the defendants, plus the damage to its

business resulting therefrom and punitive damages.

The district court dismissed the plaintiff's amended

complaint relying upon 28 U.S.C. § 1341 and its

underlying policy considerations. Fulton appealed and

the matter is now before this court.

II.

The central issue now before this court is whether 28

U.S.C. § 1341 or its underlying policy considerations bar

the plaintiff's § 1983 suit for damages. After a careful

review of all the authority cited by counsel and after an

independent search for authority by this court, it

appears that no other court has ever directly addressed

itself to this precise question. This court and several

others have construed § 1341 in cases where the plaintiff

was seeking some form of equitable relief, e.g., injunc-

tive or declaratory actions. But no case has been found

where this statute was extended to damage actions as

well. Consequently, since this appears to a case of

first impression, this court must analyze § 1341 with

reference to its legislative history and the significant

cases which have construec the statute in order to

determine the important underlying policy consider-

ations. Only then may this court properly resolve the

issue.

III.

28 U.S.C. § 1341

Title 28 U.S.C. § 1341 provides:

The district courts shall not enjoin, suspend or

restrain the assessment, levy or collection of any tax

under the State law where a plain, speedy and

en remedy may be had in the courts of such

tate.

—da—

As this court has held in the past, this statute clearly

prohibits a district court from issuing an injunction

which would “suspend or restrain the assessment, levy

or collection of any tax under State law” unless the State

remedy is not “plain, speedy and efficient.” 28 East

Jackson Enterprises, Inc. v. Cullerton, 551 F. 2d 1098

(7th Cir. 1977) (on second petition for rehearing); see

also 28 East Jackson Enterprises, Inc. v. Cullerton, 523

F. 2d 439 (7th Cir. 1975); Pintozzi v. Scott, 486 F. 2d 375

(7th Cir. 1970); Tramel v. Schrader, 505 F. 2d 1810 (5th

ae 1975); and Bland v. McHann, 463 F. 2d 21 (5th Cir.

).

Additionally, despite the fact that § 1341 speaks only

of injunctions, this court has held that the statute also

bars declaratory actions. Illinois Central R. Co. v.

Howlett, 525 F. 2d 178 (7th Cir. 1975); Gray v. Morgan,

371 F. 2d 172 (7th Cir. 1966). See also Perez v. Ledesma,

401 U.S. 82 pt (Brennan, J., concurring in part and

dissenting in part); Hickmann v. Wujick, 488 F. 2d 875

(2d Cir. 1973); American Commuters Ass'n v. Levitt, 405

F, 2d 1148 (2d Cir. 1969).

While it is well settled that § 1341 may bar equitable

relief, injunctive and declaratory, it is uncertain whether

the policy considerations which underlie § 1341 may also

bar an action for damages. To resolve this question

hs erg it is important to examine the legislative

istory and congressional intent of § 1341.

Legislative History

The Fifth Circuit in Hargrave v. McKinney, 413 F. 2d

320 gi explained the context in which § 1341 was

enacted:

The expansion of the federal judicial power

countenanced by the Supreme Court in Ex parte

Young, 1908, 209 U.S. 128, 28 S. Ct. 441, 52 L. Ed.

714, “brought about a major shift in the actual

distribution of power between states and nation”

which was not “overlooked by Congress, or by the

spokesmen of the interests adversely affected.” H.

art and H. Wechsler, The Federal Courts and

Federal System, pp. 846-847 (1953). Congress re-

sponded to the federal courts’ newly-declared power

to enjoin actions by state officials in their enforce-

ment of state legislative acts by enacting four major

pieces of legislation.

—hja—

In a footnote, the court specified the legislation:

(1) Let phi requirement of 1910 presently

codified in 28 U.S.C. § 2281. [now repealed Pub. L.

94-381, §§ 1, 2 Aug. 12, 1976, 90 Stat. 1119.]

(2) The stay en of 1913 presently

codified in 28 U.S.C. § 2284 (last paragraph).

(3) Johnson Act of 1934 prohibiting injunctions

against state public utility rate orders—presently

codified in 28 U.S.C. § 1342.

(4) Tax Injunction Act of 19837—at issue in the in-

stant case. [codified in 28 U.S.C. § 134)]

Id. at 325 and n. 9.

It therefore appears that § 1341 was part of a larger

congressional response to Ex parte Young, supra,

wherein Congress attempted to limit the injunctive

power of federal courts.

The specific congressional policy considerations which

underlie § 1841 are revealed in the Senate Judiciary

Committee Report. In the report, two purposes of § 1341

are expressed. First, the statute was directed at the

elimination of unjust discrimination between citizens of

the State and foreign corporations. It was feared that a

foreign corporation, through diversity, could obtain a

federal injunction prohibiting the collection of certain

state taxes. Such a procedure, however, was unavailable

to a State resident. As the Senate Judiciary Committee

Report stated:

If those to whom the federal courts are open may

secure injunctive relief against the collection of tax-

es, the highly unfair picture is presented of the

citizen of the State being required to pay first and

then litigate, while those privileged to sue in the

federal courts need only pay wha: they choose and

withhold the balance during the period of litigation.

S. Rep. No. 1035, 75th Cong., 1st Sess. 1-2 (1937). The

second purpose of § 1341 was also directed at foreign

corporations. The primary concern was that foreign cor-

porations, by obtaining a federal injunction, could

seriously disrupt the State taxing process. As the Senate

Report stated it was possible for

—6a—

foreign corporations doing business in such States

to withhold from them and their governmental sub-

divisions taxes in such vast amounts and for such

long periods of time as to seriously disrupt State

and county finances. The pressing needs of these

States for this tax money is so a that in many

instances they have been compelled to compromise

these suits, as a result of which substantial portions

of the tax have been lost to the States without a

judicial examination into the real merits of the con-

troversy.

In Tramel v. Schrader, 505 F. 2d 1310 (5th Cir. 1975),

Judge Coleman, writing for the Fifth Circuit, sum-

marized the congressional intent in enacting § 1341:

In other words, in passing the Tax Injunction

Statute, Congress took aim at two evils.

First, Congress noted that some foreign cor-

porations were in the habit of delaying the payment

of taxes through an action in federal court since

they could invoke diversity jurisdiction. State

citizens, on the other hand, could not obtain a

federal forum based on diversity jurisdiction. By

passing the Tax Injunction Statute, Congress sought

to treat the two classes, foreign corporations and

resident citizens, alike.

Second, Congress noted that allowance of injunc-

tion suits in the federal courts inevitably resulted in

delays in the collection of public revenues by the

state and local governments. Because of pressing

need for the money, the state and local governments

often had to compromise the claims, taking less

than what was, in fact, dve. By closing the federal

courthouse door to taxpayer claims, Congress

sought to end this burdensome disruption of local

financing.

Id. at 1816, See also Garrett v. Banford, 538 F. 2d 68 (3d

Cir. 1976).

It should be noted that the legislative history of § 1341

speaks only of the concerns that are encountered by the

use of injunctions. No mention is made of the

applicability of this statute to actions which seek other

—T7a—

relief. From a narrow reading of the statute one might

infer that Congress intended to restrict only injunctive

relief. However, as discussed earlier, this Court and

several others have held that Congress’ intention was

best served by extending the jurisdictional bar of § 1341

to prohibit gg actions as well. /llinois Central R.

Co. v. Howlett, 525 F. 2d 178 (7th Cir. 1975); ty

Morgan, 371 F. 2d 172 (7th Cir. 1966); Hickmann v, Wu-

jick, 488 F. 2d 875 (2d Cir. 1973); American Commuters

Ass'n v. Levitt, 405 F. 2d 1148 (2d Cir. 1969). These

cases and others will now be analyzed to determine if

the policy considerations and congressional intent of

1341 would be served by extending the jurisdictional

ar of the statute to prohibit damage actions as well.

Prior to the enactment of § 1341, a unanimous

Supreme Court of the United States in Matthews v.

Rogers, 284 U.S. 521 (1932), speaking through Mr.

Justice Stone, discussed the sensitive nature of federal

injunctions which enjoin the collection of a particular

state tax: 7

The scrupulous regard for the rightful in-—

dependence of state governments which should at

all times 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 case where the asserted federal

right may be preserved without it. Whenever the

qeeemen has been presented, this Court has uni-

ormly held that the mere illegality or un-

constitutionality 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, from which the

cause may be brought to this court for review if any

federal question be involved, Jud. Code § 237, or to

his suit at law in the federal courts if the essential

elements of federal jurisdiction are present. See

Boise Water Co. v. Boise City, 213 U.S, 276; Shelton

v. Platt, 189 U.S. 591; Dows v. Chicago, 11 Wall.

108, 110, 1 emphasis added)

Id. at 525-526.

A

—S8a—

The Supreme Court's —— concern in Matthews

centered on the exercise of a federal court’s formidable

injunctive powers. The opinion apparently would permit

a plaintiff to maintain an action at law seeking only

damages.

Later in Great Lakes Dredge & Dock Co. v. Huffman,

319 U.S. 293 (1948), the Supreme Court of the United

States, speaking unanimously through Chief Justice

Stone, extended the policy of self-restraint followed b

courts in federal equity actions seeking to interfere wit

the collection of state taxes, a policy approved by Con-

gress in its adoption of § 1341, to declaratory actions:

It is true that the Act of Congress speaks only of

suits “to enjoin, suspend, or restrain the assess-

ment, levy, or collection of any tax” imposed by

state law, and that the declaratory judgment

procedure ~ be, and in this case was, used only

to procure a determination of the rights of the par-

ties, without an injunction or other coercive relief.

It is also true that that procedure may in every

practical sense operate to suspend collection of the

state taxes until the litigation is ended. But we find

it unnecessary to inquire whether the words of the

statute may be so construed as to prohibit a

declaration by federal courts concerning the in-

validity of a state tax. For we are of the opinion

that those considerations which have led federal

courts of equity to refuse to enjoin the collection of

state taxes, save in exceptional cases, require a like

restraint in the use of the declaratory judgment

procedure.

Id, at 299.

More recently in Perez v. Ledesma, 401 U.S. 82 (1971),

Mr. Justice Brennan, concurring in part and dissenting

in part, reiterated the sensitive policy considerations un-

derlying the federal courts’ historic nonintervention in

state tax matters:

The special reasons justifying the policy of federal

non-intervention with state tax collection are ob-

vious. The procedures for mass assessment and

collection of state taxes and for administration and

—Ya—

adjudication of taxpayers’ disputes with tax officials

are generally complex and necessarily designed to

operate according to established rules. State tax

agencies are organized to discharge their respon-

sibilities in accordance with the state procedures. If

federal declaratory relief were available to test

state tax assessments, state tax administration

might be thrown into disarray, and taxpayers

might escape the ordinary procedural requirements

im by state law. During the pendency of the

federal suit the collection of revenue under the chal-

lenged law me be obstructed, with consequent

damage to the State’s budget, and perhaps a shift to

the State of the risk of taxpayer insolvency.

Moreover, federal constitutional issues are likely to

turn on questions of state tax law, which, like issues

of state regulatory law, are more properly heard in

the state courts. See mag! . Rep. No. 1085,

75th Cong., lst Sess. (1937). These considerations

make clear that the ya ted licy of the anti-

tax-injunction statute, 28 U.S.C. P134i, relied on in

Great Lakes, bars all antici a federal adjudica-

tion in this field, not merely federal injunctions.

Id, at 127-128 n. 17,

Several other courts have reached the same con-

clusions, See Tramel v. Schrader, 505 F. 2d 1810 (5th

Cir. 1975); Mandel v. sige og ys F. 2d 364 (9th Cir.

1974); Hickmann v. Wujick, 488 F. 2d 875 (2d Cir. 1973);

Bla v. McHann, 463 F. 2d 21 (5th Cir, 1972);

8 gaan Assoc, v. Levitt, 405 F. 2d 1148 (2d

ir. .

Unlike the previous cases which have applied § 1341

and have prohibited equitable relief, two cases have

reached different results. In Wells v. Malloy, 510 F. 2d

74 (2d Cir, 1975), the _— brought an action to en-

oin the enforcement of a section of the Vermont Motor

ehicle Purchase and Use Tax Statute. The plaintiff, an

indigent, claimed that the sanction for nonpayment of

the tax (suspension of his driver’s license) violated his

constitutional rights. The district court held that the ac-

tion was barred La § 1341 and dismissed the complaint

for want of jurisdiciton. The Second Circuit reversed.

—10a—

Judge Friendly, writing for the court, found that the

plaintiff was not seeking to restrain the “assessment” or

‘levy” of a tax under state law. Indeed the plaintiff did

not dispute that the tax was due and owing. Nor was the

plaintiff's action an attempt to restrain the “collection”

of a state tax. Judge Friendly, after examining the

legislative history of § 1841, determined that the sanc-

tion for nonpayment of the Vermont tax was not en-

compassed in the term “collection” of § 1341:

The context and the legislative history, see H.R.

Rep. No. 1508, 75th Cong., Ist Sess. 2 Neel ; Sen.

Rep. No. 1035, 75th Cong., lst Sess. 1-2 (1987); 81

Cong. Rec. 1415, 1416 (Feb. 19, 1937) (remarks of

Sen, Bone), lead us to conclude that, in speaking of

“collection”, Congress was ‘aprile to methods

similar to assessment and levy, ¢.g., distress or ex-

ecution, compare 4 “lg Ay Lessee v. Hoboken Land

and Improvement Co., 18 How. (59 U.S.) 272, 278

15 L. Ed. 872 (1856); Damsky v. Zavatt, 289 F. 2d

46, 50-51 (2d Cir. 1961), that would produce money

or other property directly, rather than indirectly

through a more general use of coercive power. Con-

gress was thinking of cases where taxpayers were

repeatedly using the federal courts to raise

questions of state or federal law going to the validi-

ty of the particular taxes imposed upon them—not

to a case where a taxpayer contended that an un-

usual sanction for non-payment of a tax admittedly

due violated his constitutional rights, an issue

which, once determined, would be determined for

him and all others.

Id, at 77.

Thus despite the fact the plaintiff did not pursue any

— remedies, the court held that § 1341 did not bar his

action.

In Hargrave v. McKinney, 418 F. 2d 320 (5th Cir.

1969), the Fifth Circuit held that § 1341 did not bar an

action which challenged the constitutionality of a

Florida statute.

—lla—

After analyzing these cases it is clear that § 1341 bars

any action which seeks equitable relief which if granted

would disrupt the state taxing process. Thus an action

which seeks to enjoin the “assessment, levy or collection

of any tax under state law” may be prohibited. Like-

wise, an action which seeks a declaratory judgment may

also be barred, since a declaration that a particular

state tax statute is unconstitutional would have a crippl-

ing effect upon the state taxing process. So long as the

states provide plaintiffs with a “plain, speedy and ef-

ficient remedy” in the state courts, the plaintiffs are pre-

cluded from pursuing equitable. relief in federal courts.

The cases in this circuit are in accord. 28 Last

Jackson Enterprises, Inc. v. Cullerton, 523 F. 2d 439 (7th

Cir. 1975), on second petition for rehearing, 551 F. 2d

1098 (7th Cir. 1977); Iltinois Cent. R. Co. v. Howlett, 525

F, 2d 178 (7th Cir. 1975); Gray v. Morgan, 371 F. 2d 172

(7th Cir, 1966). In each case, the plaintiffs were seekin

some form of equitable relief which, if granted, woul

have disrupted the state taxing process. In Cullerton,

supra, the plaintiffs were seeking an injunction. In

Illinois Cent. R. Co., supra, the plaintiffs were seeking a

declaratory judgment. In — supra, the plaintiffs

were seeking an injunction, declaratory judgment and a

tax refund. In each case this court determined that the

laintiffs had an adequate state remedy and held that

1341 barred the action. As Chief Judge Hastings

stated in Gray:

We hold that § 1341 means what it says, and havin

determined to our own satisfaction that plaintiffs

have available to them a plain, speedy and efficient

remedy in the Wisconsin state courts, they may not

use a federal forum to seek the equitable relief

sought here against the state income taxes in ques-

tion.

371 F. 2d at 175.

—-12a—

IV.

In the present case the plaintiff argues that the

significant difference is the relief sought. Fulton con-

cedes that were it seeking some form of equitable relief

1841 would bar its suit. However, since it seeks

amages for the allegedly wrongful conduct of officials,

Fulton argues that 1341 or its underlying palicy con-

siderations are inapplicable. Furthermore, Fulton con-

tends that the purpose of § 1983 suits would be thwarted

if § 1841 were construed to bar damage actions as well,

This court agrees with the a, argument, As

has been demonstrated, § 1341 is directed at prohibitin

equitable relief. The statute, its legislative history an

significant cases indicate that the primary evil to be

avoided is federal equitable relief which would disrupt

the state taxing process. A federal court injunction or

declaratory judgment would not only undermine and

jeopardize a state’s ability to collect its revenue but

would also seriously damage the delicate balance in-

herent in our federalistic system of government.

These concerns are not present in a suit for damages.

In the present case the plaintiff is not seeking to enjoin

any taxing process. Nor will a judgment for the plaintiff

have that effect. Fulton is seeking dam for the

alleged renee and intentional conduct of certain of-

ficials who allegedly deprived Fulton of constitutional

rights while acting under color of state law. Fulton

seeks relief which is retrospective, i.e., compensation for

harm done, unlike equitable relief which is anticipatory

or prospective. Additionally, the outcome of the present

suit does not pivot upon the construction of some state

statute or tax regulation which should more properly be

construed by appropriate state courts. The issue is not

whether a state statute is constitutionally valid but

rather whether an official’s conduct violated established

constitutional standards. This is precisely the pur of

§ 1983 suits. As Mr. Justice Douglas stated, writing for

the Supreme Court of the United States in Monroe v.

Pape, 365 U.S. 167 (1961);

There can be no doubt at least since Hx parte

Virginia, 100 U.S. 339, 346-347, that Congress has

—13a—

the power to enforce provisions of the Fourteenth

Amendment against those who carry a badge of

authority of a State and represent it in some capaci-

ty, whether they act in accordance with their

authority or misuse iit. See Home Tel. & Tel. Co. v,

City of Los Angeles, 227 U.S, 278, 287-296.

Id, at 171-172.

Later, in Mitchum v. Foster, 407 U.S. 225 (1972), the

Supreme Court of the United States reiterated that posi-

tion:

Section 1988 opened the federal courts to private

citizens, offering a uniquely federal remedy against

incursions under the claimed authority of state law

won Fae secured by the Constitution and laws of

the Nation.

Id. at 239 (footnote omitted),

And more recently in Carey v. Piphus, ... U.S. ...., 46

U.S.L.W. 4224 (March 21, 1978), Mr. Justice Powell

writing for the court stated:

The legislative history of § 1983, elsewhere detailed,

e.g., Monroe v. Pape, 365 U.S. 167, 172-188 (1961);

id. at 225-284 (Frankfurter, J., dissenting in

art); Mitchum v. Foster, 407 U.S, 225, 238-242

1972), demonstrates that it was intended to

“create[] a species of tort liability” in favor of per-

sons who are deprived of “rights, privileges, or im-

munities secured” to them by the Constitution.

Imbler v. Pachtman, 424 U.S. 409, 417 (1976).

Id, at 4225-26,

It should be noted that the fact that the plaintiff in

this suit is a corporation is of no legal significance.

While a corporation is not a “citizen” within the mean-

ing of the privileges and immunities clause, Hague v.

Committee for Industrial Organization, 807 U.S. 496

1989); Orient Ins. Co. v. Daggs, 172 U.S. 561 (1899);

ul v. Virginia, 75 U.S. (8 Wall) 168 (1868); see also

Asbury Hospital v. Cass County, N.D., 326 U.S. 207

(1945), a corporation is a “person” within the meaning of

the equal protection and due process of law clauses of

—l4a—

the Fourteenth Amendment, Grosjean v. American Press

Co., 297 U.S. 233 (1936); Adams v. City of Park Ridge,

293 F. 2d 585 (7th Cir. 1961); Advocates for Arts v.

Thompson, 532 F, 2d 792 (1st Cir. 1976); Raymond Motor

Transportation, Inc. v. Rice, 417 F. Supp. 1352 (3-Judge

Dist. Ct. W.D, Wis. 1976). get a 2 Fulton, the cor-

porate plaintiff, may maintain a § 1 action to secure

the protection and guarantees accorded to it under the

Fourteenth Amendment.

Furthermore, as announced in Lynch v. Household

Finance Corp., 405 U.S. 588 (1972), the distinction

between personal liberties and proprietary ho as a

= to the contours of a § 18438(3) = iction is

ikewise meaningless, lt is true that the Supreme Court

in Lynch in footnote 6 indicated an exception to this rule

in cases which were barred by § 1841. However, since

this court has already determined that § 1341 is in-

applicable, the exception alluded to in the footnote in

Lynch is likewise inapplicable.

The defendants argue that the policy considerations of

: 1341 would be best served by this court holding that

1841 bars all actions, equitable and legal. We cannot

agree, After reviewing the statute, its legislative histo

and significant cases we can find no evidence whic

would indicate that § 1341 was directed at damage ac-

tions as well as equitable actions. Clearly if Congress

had intended to prohibit all federal court relief in state

tax matters, it could have done so, Congress, however,

did not address the subject of damage actions. Congress

thus did not give state tax officials absolute immunity

for acts committed in their official capacity. Congress

only prohibited certain specific remedies which due to

their nature are highly disruptive of state ee

Quite clearly, if a county or state tax official intentional-

ly and unjustifiably raised an individual’s property

assessment merely because of the individual’s race,

ethnic oy my or political affiliation, the official

could be liable for damages under § 1983 for the misuse

of his authority. Section 1841 only bars certain forms of

relief; it does not serve to deprive a federal court of

jurisdiction of all actions merely because the defendant

is a state or county tax official. If a state or county tax

<nltiiitien

official peer eg | violates a plaintiff's constitutional

rights, he may be held liable for an action for damages.

We note that in a recent decision of this court the

point we decide today was assumed by the parties and

the court. In Sacks thers Loan Co. v. Cunningham,

(No. 77-1729, May 24, my Soe plaintiff filed an action

against the tax assessor of Marion County, Indiana seek-

ing damages and on itable relief pursuant to 28 U.S.C.

§ 1348 and 42 U.S.C. § 1983. The gravamen of the com-

plaint was that the imposition of an Indiana personal

a tax on certain tangible personal property held

bY the plaintiff violated the plaintiff's rights under the

qual Protection Clause of the Fourteenth Amendment.

The district court dismissed the plaintiff's claim for

— relief relying upon 28 U.S.C, § 1341 and dis-

missed the claim for damages for failure to state a claim

upon which relief can be granted. This court affirmed

the district court’s denial of equitable relief but re-

versed the district court’s dismissal of the plaintiff's

damage action on the ground that the district court had

applied the incorrect statute of limitations for damage

actions arising under § 1983. In so doing, this court

necessarily assumed the existence of a § 1983 cause of

action for damages against a county tax assessor.

While we now hold that § 13841 does not bar a § 1983

action for damages, that is not to say that whenever a

tax official raises a property assessment he exposes him-

self to a § 1983 suit. In order to insure that county or

state tax officials will not exercise their legitimate dis-

cretion with undue timidity for fear of suit, they are en-

titled to a good faith defense as announced in Wood v.

Strickland, 420 U.S. 308 (1975). Therefore, we hold that

a state or county tax official will be liable for damages

under § 1983 only if he violated the plaintiff's clearly es-

tablished constitutional rights intentionally or with

reckless disre of those rights. Inadvertence or

negligence will not be enough. Thus, to paraphrase

Wood v. Strickland, supra, a compensatory award will

be appropriate only if the tax official has acted with an

on motivation or with such intentional or

reckless disregard of the plaintiff's clearly established

—i6a—

constitutional rights that his action cannot be reason-

ably characterized as being in good faith. Jd. at 332. See

also Procunier v. Navarette, ..... USS. ....., 46 U.S.L.W.

4144 (Feb. 22, 1978).

Furthermore, while we now hold that the plaintiff has

stated a cause of action under § 1983, we leave for the

district court to determine on a more complete record

whether any of the defendants have had the necessary

yey involvement to incur liability. As this court has

eld in Adams v. Pate, 445 F. 2d 105 (7th Cir. 1971),

there is no vicarious liability under § 1983; respondeat

superior is inapplicable. See also Monell v. Department

of Social Services of the City of New York, ..... Oo} Sn

46 U.S.L.W. 4569 (June 6, 1978); Draeger v. Grand Cex-

tral, Inc., 504 F. 2d 142 (10th Cir. 1974); Johnson v.

Glick, 481 F. 2d 1028 (2d Cir. 1973); Jennings v. Davis,

476 F. 2d 1271 (8th Cir. 1973). Accordingly, any defen-

dant who did not personally and intentionally or with

reckless disregard violate the plaintiffs constitutional

rights will not be held liable for damages. This is a

matter which the district court must address on remand

and may address preliminarily to any trial on the

merits.

Another issue the district court will address on re-

mand is whether any of the plaintiff's claims is barred

by the appropriate statute of limitations. Since the dis-

trict court dismissed the plaintiff's complaint relying

upon 28 U.S.C. 1341, it never reached the statute of

limitations question. Although the defendants have

argued the question on appeal, we feel the better course,

in light of our opinion today, is to permit the district

court to address the issue upon a more complete record

and following our decision in Beard v. Robinson, 563 F.

2d 331 (7th Cir. 1977). Therefore, on remand, the dis-

trict court must decide this statute of limitations ques-

tion on a fully developed record.

The defendants also argue that even if the plaintiff

has stated a cause of action under § 1983 that the district

court should abstain or defer because the plaintiff has

not exhausted his state remedies. We find no merit in

this argument and see no reason why this § 1983 action

should treated differently from others where exhaus-

—17a—

tion is not required. As stated in Monroe v. Pape, 365

U.S. 167 (1961), referring to § 1983 actions:

It is no answer that the State has a law which if en-

forced would give relief. The federal remedy is sup-

plementary to the state remedy, and the latter need

not be first sought and refused before the federal

one is invoked.

Id. at 183.

See also McNeese v. Board of Ed. for Com. Unit. Sch.

Dist. 187, 373 U.S. 668 (1963); Drexler _v. Southwest

Dubois School Corp., 504 F. 2d 836 (7th Cir. rehearing

en banc 1974). Even if § 1983 were a supplementary

remedy, see Askew v. Hargrave, 401 U.S. 476 eo the

unavailability in the Illinois courts of certain elements of

plaintiffs damage, i.e., interest and attorneys’ fees,

would make the federal remedy necessary to afford com-

plete relief.

Accordingly, in light of all the foregoing, we now hold

that the plaintiff, Fulton Market Cold “neage Company,

has stated a cause of action under 42 U.S.C. § 1983

which is not barred by 28 U.S.C. § 1341. The order of

the district court is therefore now REVERSED and the

case now REMANDED for proceedings consistent with this

opinion.

A true Copy:

Teste:

Clerk of the United States Court of

Appeals for the Seventh Circuit

—18a—

APPENDIX B

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

[Filed January 12, 1977]

ORDER

The Court does this day hereby enter its Memorandum

Order. The Plaintiff’s amended complaint is hereby dis-

missed. (see Memorandum order for complete details)

January 7, 1977 /s/ Leighton, Judge

—19a—

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

[Filed January 12, 1977]

MEMORANDUM ORDER

Plaintiff Fulton Market Cold Storage Company, an IIli-

nois corporation which owns real estate situated in Chi-

cago, brings this civil rights action in a four-count com-

plaint against defendants, pursuant to 42 U.S.C. §1983, the

Due Process and Equal Protection clauses of the 14th

amendment to the U.S. Constitution. It complains that

since 1958, its real estate has been systematically and un-

lawfully over-assessed and over-taxed in violation of rights

secured by the 14th amendment, the due process-equal pro-

tection provision of the Illinois Constitutions of 1870 and

1970, the Revenue Act and Article IX, section 1 of the Tlli-

nois Constitution of 1870. It claims that real estate situated

in Cook County has not been assessed at a uniform level

as required by law; that the system of assessments ad-

ministered by defendants results in illegal, discriminatory,

and disparate assessments; and that since 1958, its prop-

erty has been assessed at levels which generally exceed

those at which other property is assessed. Plaintiff claims

that it has sought relief from these illegal assessments,

but to no avail. Accordingly, it files this amended complaint

asking this court for judgment in the amount of $60,000

from each defendant, reimbursement for sums expended

from 1958 through 1974 in seeking redress from their acts,

consequential and punitive damages, costs, and such other

relief as may be just. The jurisdiction of this court is in-

voked pursuant to 28 U.S.C. §§1331 and 1343; the amount

in controversy allegedly exceeds $10,000, exclusive of in-

terest and costs.

—

In Count I, plaintiff seeks relief against defendants Cul-

lerton and Tully, claiming that as assessors of Cook County

they have continuously, systematically, and illegally as-

sessed property in the county at disparate and discrimina-

tory levels since 1958. In Count II, plaintiff seeks relief

against defendants Keane, Korzen, Semrow, and Zaban

allegedly members of the Cook County Board of Appeals,

for their failure to discharge their duty to review and

correct unlawful assessments made by the Cook County

Assessor. Plaintiff alleges that it sought relief from the

Board in 1968, 1970 and thereafter; and that its failure

to take remedial action perpetuated the discriminatory and

illegal assessments existing in Cook County to plaintiff’s

detriment. In Count III, plaintiff seeks relief from de-

fendants Korshak, Jones, and Mahin, who, as directors

of the Illinois Department of Revenue, allegedly failed to

discharge their duty to equalize total assessments in Cook

County and order reassessment of property in any year

in which assessments were not in compliance with the law,

a duty allegedly imposed on them by law until 1970. In

Count ITI, plaintiff seeks relief against defendants Len-

hausen and Kirk who, as directors of the Illinois Depart-

ment of Local Affairs, sueceeded to this duty and allegedly

failed to discharge their responsibilities. Finally, in Count

IV, plaintiff alleges a general conspiracy count against all

defendants for their promulgation of, and acquiescence in,

the illegal system of assessments in effect from 1958 through

1974,

The cause is before the court on a series of defendants’

motions attacking plaintiff’s amended complaint. Defend-

ant Cullerton moves to strike and dismiss on the ground

that actions involving assessments do not fall within the

purview of 28 U.S.C. §1343 and 42 U.S.C. $1983; that this

court should abstain from exercising jurisdiction; that

jurisdiction is barred by principles underlying 28 U.S.C.

—2la—

$1341; that the complaint fails to state a claim upon which

relief can be granted; and that the complaint fails to state

a substantial federal question. Defendants Tully, Semrow,

and Zaban have adopted Cullerton’s motion; and in addi-

tion, argue that the complaint, as to them, fails to state a

claim on which relief can be granted, and that plaintiff’s

action, to the extent it seeks relief for assessments made

in 1969, is barred by the doctrine of res judicata arising

from People ex rel. Korzen v. Fulton Market Cold Storage

Co., 62 Ill. 2d 443, 343 N.E. 2d 450 (1976). Defendants

Korshak and Kirk, in a motion adopted by defendants

Lenhausen, Mahin, and Jones, move to dismiss Counts ITI

and IV, arguing: that the action is barred by principles

of res judicata, collateral estoppel, and comity; that state

defendants are immune from suit under provisions of the

11th amendment of the U.S. Constitution; that suit is

barred by principles codified by 28 U.S.C. §1341 or prin-

ciples of abstention; that suit is barred by the applicable

statute of limitations and the doctrine of laches; and that

plaintiff’s action is barred by its failure to exhaust pro-

scribed administrative remedies. Finally, defendants Keane

and Korzen adopt the motion to dismiss filed by defend-

ants Cullerton, Tully, Semrow and Zaban, and argue fur-

ther that the action is barred by the applicable statute of

limitations, and by laches.

From an examination of the amended complaint, it ap-

pears that plaintiff is asking this court to interject itself

into the realm of state procedures of taxation, to find that

the manner in which assessments were made were illegal,

and to order relief in violation of principles underlying 28

U.S.C. §1341. After consideration of the motions and briefs

of the parties, the court concludes that plaintiff’s amended

complaint must be dismissed.

The Johnson Act, 28 U.S.C. $1341, on its face prohibits

a district court from enjoining the collection or assess-

—22a—

ment of a state tax when there exists a plain, speedy, and

efficient remedy under state law. And it has been held that

the underlying policy of 28 U.S.C. $1341 applies with equal

force against federal courts’ granting declaratory judg-

ment relief in similar circumstances. See Great Lakes

Dredge and Dock Co. v. Huffman, 319 U.S. 293 (1943) ;

City of Houston v. Standard-Triumph Motor Co., 347 F.

2d 194 (5th Cir. 1965), cert. denied, 382 U.S. 974 (1966).

As a broad doctrine, this act has been construed to em-

body the principle that federal courts should not inter-

fere with matters of state taxation. See 28 East Jackson

Enterprises, Inc. v. Cullerton, 523 F.. 2d 439 (7th Cir. 1975),

cert. denied 423 U.S. 1073 (1976).

Therefore, in the judgment of this court, the principles

underlying enactment of 28 U.S.C. §1341 apply to bar this

suit. Plaintiff seeks relief in this court without having

availed itself of all plain, speedy, and efficient remedies

provided by Illinois administrative and judicial procedures.

See People ex rel. Korzen v. Fulton Market Cold Storage

Co., 62 Ill. 2d 443, 343 N.E. 2d 450 (1976), cert. denied

45 L.W. 3250; Goodfriend v. Board of Appeals of Cook

County, 15 Ill. App. 3d 861, 305 N.E. 2d 404 (1973). With

due consideration to the peculiar needs of state tax ad-

ministration, the court concludes that to allow plaintiff’s

suit to proceed v:: this amended complaint would subvert

the orderly administration of state 1vvenue procedures and

violate established principles of comity. See Perez v. Ledes-

ma, 401 U.S. 82, 128 n.17 (1971) (Brennan, J., concurring

and dissenting in part.) Therefore it is ordered that plain-

tiff’s amended complaint be dismissed.

So ordered

/s/ George N. Leighton

United States District Judge

Dated: January 7, 1977

—238a—

APPENDIX C

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

[Filed May 17, 1976]

FIRST AMENDED COMPLAINT

Plaintiff, Fulton Market Cold Storage Company (‘‘Ful-

ton’’) complains of defendants, P. J. Cullerton, Thomas

M. Tully, George M. Keane, Bernard J. Korzen, Harry H.

Semrow, Seymour Zaban, Marshall Korshak, Theodore A.

Jones, George Mahin, Robert J. Lenhausen and Frank A.

Kirk as follows:

Tue Parties

1. Fulton is an Illinois corporation owning a cold stor-

age warehouse and having its principal place of business

in Chicago, Illinois.

2. P. J. Cullerton was Assessor of Cook County, IIli-

nois from 1958 to 1974. As Assessor he had the duty to

assess for taxation all real and personal property, not ex-

empt, located in Cook County.

3. Thomas M. Tully has been Assessor for Cook County,

Illinois since December 1974 and prior thereto Deputy

Assessor. As Assessor Tully’s duties have been the same

as those of his predecessor Cullerton.

4. The following defendants have been members of the

Cook County Board of Appeals for the periods shown:

George M. Keane 1967-1972

Bernard J. Korzen 1967-1970

Harry H. Semrow 1971 to present

Seymour Zaban 1973 to present

—24a—

As members of the Board of Appeals, these defendants

had the duty to review and order corrected all unlawful

assessments brought before them on complaint of the tax-

payer and to order the Cook County Assessor to correct

mistakes and errors in such assessments.

5. The following defendants have been Directors of the

Illinois Department of Revenue for the periods shown:

Marshall Korshak 1965-1967

Theodore A. Jones 1967-1968

George Mahin 1969-1972

As Director, these defendants, until 1970, had the duty to

equalize the total assessed valuations of the several coun-

ties so that such total assessed valuations as equalized

equaled the full cash value of the property subject to as-

sessment within the several counties and the duty to order

a reassessment for any year in which they found that the

assessments in any county were not in substantial compli-

ance with law. In 1970 and thereafter these duties were

assumed by the Illinois Department of Local Government

Affairs.

6. Robert J. Lenhausen was Director of the Illinois

Department of Local Government Affairs from 1970 to

1972 when he was succeeded by the present director Frank

A. Kirk.

7. At all times and for all purposes here in question,

each defendant acted under color of law, viz 120 Ill. Rev.

Stat. §482 et seq., commonly known as the Illinois Revenue

Act of 1939, as amended, (‘‘the Revenue Act’’) and the

Illinois Constitutions of 1870 and of 1970.

JuRIsDICTION AND VENUE

8. Jurisdiction is based on 28 U.S.C. §1343 which gives

federal courts jurisdiction over damage actions under 42

USC $1983 against persons who have violated civil rights

—25a—

under color of state law. Jurisdiction is also based on 28

USC §1331 in that the matter in controversy arises under

the United States Constitution and the amount in contro-

versy exceeds $10,000 exclusive of interest and costs. Venue

lies under 28 USC $1391.

Count I

As to Cullerton and Tully plaintiff alleges :

9. From 1958 to 1971 Cullerton was required by the

Revenue Act and the Illinois Constitutions of 1870 and

1970 to assess for taxation all real and personal property

not exempt, located in Cook County at 100% of full cash

value, and from 1971 to 1973 at 50% thereof.

10. Under the Revenue Act taxes constitute a lien on

property as of January 1 in the year of levy. The imposi-

tion of such lien diminishes the value of property and con-

stitutes a taking thereof.

11. From 1958 to date, plaintiff has been the owner of

improvements to real estate at 1000 Fulton Market, Chi-

cago, Cook County, Illinois consisting of a 10-story cola

storage warehouse and peripheral structures. Plaintiff is

the lessee under a long term ground lease of the underlying

fee. Under the lease terms, plaintiff is obligated to pay ail

real estate taxes levied against the property.

12. Cullerton assessed plaintiff’s property for 1969 at

a valuation of $1,080,785, or at approximately 70% of full

cash value. Application of the multiplier of 1.52 for 1969

resulted in an equalized valuation of $1,642,798, or, within

limits of assessment accuracy, approximately 100% of full

cash value. Based on this equalized valuation and the tax

rate for Chicago for 1969, plaintiff was required to pay and

did pay taxes in the amount of $108,128.64.

—26a—

13. In making plaintiff’s assessments for 1958-1973,

Cullerton systematically, knowingly, intentionally, fraudu-

lently and invidiously discriminated against plaintiff and

took plaintiff’s property without due process of law in vio-

lation of plaintiff’s rights under the Due Process and

Equal Protection clauses of the 14th Amendment of the

U.S, Constitution, the Due Process provisions of the Illinois

Constitutions of 1870 and 1970, the Revenue Act and Article

IX, Section 1 of the Illinois Constitution of 1870. Such dis-

crimination and unlawful taking occurred, in part, as fol-

lows:

a) Between 1958-73 Cullerton systematically and con-

b)

tinuously assessed properties in Cook County so that

property generally was assessed at be/ween 20 and

35% of fair cash value notwithstandirg he was re-

quired by law to assess all property ai 100% of fair

cash value between 1958-1971 and at 50% thereof

from 1971-1973. During the entire period Cullerton

systematically and continuously assessed tens of

thousands of properties in Cook County at more

than 200% the level at which property generally in

Cook County was assessed although required by law

to assess at a uniform level. Each year between 1958-

1973 Cullerton assessed plaintiff’s property greatly

in excess of the level at which property generally

was assessed in Cook County in those years. In

1968 and 1969 Cullerton assessed plaintiff’s prop-

erty at two and one-half times the level at which

property was generally assessed in Cook County in

those years.

Cullerton had full knowledge that he was assessing

property generally at substantially less than 100%

of full cash value from 1958-71 and at substantially

—27a—

less than 50% of full cash value from 1971-1973 and

that there existed during the entire period enormous

disparities in the levels of assessment of property

within Cook County:

i) Cullerton’s records for the years 1958-1973

show these undervaluations and disparities.

ii) Each year between 1958-1973, the Illinois

Department of Local Government Affairs (or

its predecessor in function the Illinois Depart-

ment of Revenue) advised Cullerton of these

undervaluations and disparities.

iii) Each year between 1958-1973 not less than

five thousand taxpayers advised Cullerton, in

seeking relief from him, of his discrimination

against them by virtue of these undervaluations

and disparities.

iv) Each year between 1958-1973, from five to

fifteen thousand taxpayers advised the Cook

County Board of Appeals in writing, in seek-

ing relief from it, of Cullerton’s discrimination

against them by virtue of these undervaluations

and disparities. In each case, the Cook County

Board of Appeals notified Cullerton of the al-

leged discrimination.

v) In 1968 plaintiff notified the Cook County

Board of Appeals of the discrimination being

practiced against it and the Board advised Cul-

lerton thereof.

vi) Since 1967, Cullerton has had actual knowl-

edge of the full cash value of every parcel of

real estate sold in Cook County in an arms

length sale.

¢) Cullerton willfully and purposefully intended to prac-

tice and to continue to practice the foregoing system

—28a—

of illegal undervaluation and discriminatory assess-

ments.

i) Although advised each year by his own rec-

ords, and notified by the Illinois Department of

Local Government Affairs (or its predecessor),

the Cook County Board of Appeals, thousands

of taxpayers, and by tens of thousands of Real

Estate Transfer Declarations of his systematic

undervaluations and discriminatory assessments,

Cullerton willfully failed and refused to correct

these practices in the years they occurred and to

prevent them from re-occurring in subsequent

years.

ii) In 1968 Cullerton refused to correct the

250% disparity between plaintiff’s assessment

and the average assessment level for that year

in Cook County or to prevent the same dis-

crimination from occurring the following year

and each year thereafter through 1974,

iii) Cullerton repeatedly and publicly stated in

writing during the period in question that his

assessments intentionally discriminated in favor

of homeowners by assessing their properties at

less than one-half the level at which he assessed

all other properties.

d) Cullerton’s foregoing systematic, knowing and inten-

tional discrimination, generally and as practiced upon

the plaintiff in 1968 and 1969, has been declared by

Tllinois courts to be illegal and fraudulent as a mat-

ter of fact and of law.

14. Tully knowingly and willfully participated in the

foregoing unlawful acts and course of conduct committed

—29a—

by Cullerton and from 1974 and thereafter maintained and

continued the same system of illegal undervaluations and

discriminatory assessments,

15. The foregoing illegal acts and course of conduct

have damaged plaintiff. Such damages include, inter alia,

the amount (over $60,000) by which the tax levy for 1969

on plaintiff's property exceeded the levy which would have

obtained but for such acts and conduct, the sums expended

by plaintiff in the years from 1958 to 1974 in seeking re-

dress from such acts and conduct, and the dislocation to

plaintiff’s business resulting therefrom.

Count IT

As to Keane, Korzen, Semrow and Zaban, plaintiff al-

leges :

1-14. Plaintiff realleges paragraphs 1 through 14 of

Count I.

15. In 1968 and in 1970 and all years thereafter plain-

tiff filed a complaint with the Board of Appeals of Cook

County, on which these defendants sat from time to time,

alleging that Cullerton’s assessments of its property were

discriminatory and seeking relief therefrom. The Board of

Appeals denied plaintiff the relief to which it was entitled

by law.

16. Tn denying plaintiff relief, the Board of Appeals

systematically, knowingly, intentionally, fraudulently and

invidiously discriminated against plaintiff and took plain-

tiff’s property without due process of law in violation of

plaintiff’s rights under the Due Process and Equal Pro-

tection clauses of the 14th Amendment of the U.S. Consti-

tution, the Due Process provisions of the Illinois Constitu-

tions of 1870 and 1970, the Equal Protection provision of

the Illinois Constitution of 1970, the Revenue Act and Ar-

—30a—

ticle [X, Section 1 of the Illinois Constitution of 1870. Such

discrimination and unlawful taking occurred, in part, as

follows:

a) The Board of Appeals had knowledge that tens of

thousands of properties in Cook County (including

plaintiff’s property) were assessed at substantially

less than 100% of full cash value between 1958-1971

and at substantially less than 50% of full cash value

between 1971-1973 and that during the entire period

there existed enormous disparities in the levels of

assessment of property within Cook County.

i) Each year between 1958-1973, the Illinois

Department of Local Government Affairs (or

its predecessor in function the Illinois Depart-

ment of Revenue) advised the Board of Appeals

of these undervaluations and disparities.

ii) Each year between 1958-1973, from five to

fifteen thousand taxpayers advised the Cook

County Board of Appeals in writing, in seek-

ing relief from it, of Cullerton’s discrimination

against them by virtue of these undervaluations

and disparities.

b) The Board of Appeals willfully intended to practice

and to continue to practice the foregoing system of

illegal undervaluations and discriminatory assess-

ments. Although notified each year by the Illinois

Department of Local Government Affairs (or its

predecessor) and by thousands of taxpayers of the

systematic undervaluations and discriminatory as-

sessments in Cook County, and being privy to the

information contained in the Rea] Estate Transfer

Declarations, the Board of Appeals willfully refused

to correct the systematic undervaluations or dis-

—3la—

criminatory assessments brought before them by

complaint and instead aggravated these evils and

their discriminatory affect upon plaintiff by il-

legally lowering the assessments of certain taxpayers

whose assessments were already substantial!y below

the level required by law.

c) The foregoing systematic, willful! and intentional

discrimination is illegal and fraudulent as a matter

of fact and state law.

17. Plaintiff realleges Paragraph 15 of Count I.

Count ITI

As to Korshak, Jones, Mahin Lenhausen and Kirk,

plaintiff alleges:

1-16: Plaintiff realleges paragraphs 1 through 14 of

Count I and paragraphs 15 and 16 of Count IT.

17. Every year from 1958-1974 Korshak, Jones, Mahin,

Lenhausen and Kirk (‘‘Kirk and his predecessors in func-

tion’’) while holding the offices described in paragraphs

5 and 6 of Count I, in connection with the discharge of

their duties to equalize tax assessment levels among the

several counties, have had full knowledge that the average

assessment for property in Cook County has been between

20-35% of full cash value although required by law to be

100% (or 50% as the case may be) of full cash value and

that tens of thousands of properties in Cook County were

assessed at more than 200% the average level of assess-

ment in Cook County although required by law to be as-

sessed at a uniform level. This knowledge was derived in

part from official ratio studies prepared by these defend-

ants pursuant to the Revenue Act which show Cullerton’s

systematic undervaluation and discriminatory assessments

of property in Cook County.

—32a—

18. Notwithstanding the foregoing, Kirk and his pred-

ecessors in function failed and refused to determine a multi-

plier which would result in an assessment level for Cook

County at full fair cash value or to order reassessments

in Cook County, or to take other remedial action, to correct

discriminatory disparities in assessments in Cook County.

On the contrary, in 1967 Korshak, and thereafter Jones,

Mahin, Lenhausen and Kirk established a formal policy

in their Departments to equalize at 50% in contravention

of the laws. Under the circumstances Kirk and his prede-

cessors in function have, by such failure and refusal, sys-

tematically, knowingly, intentionally, fraudulently and in-

vidiously discriminated against plaintiff and taken plain-

tiff’s property without due process of law in violation of

plaintiff’s rights under the Due Process and Equal Pro-

tection clauses of the 14th Amendment of the U.S. Consti-

tution, the Due Process provisions of the Illinois Constitu-

tions of 1870 and 1970, the Equal Protection provision of

the Illinois Constitution of 1970, the Revenue Act and Ar-

ticle IX, Section 1 of the Illinois Constitution of 1870.

19. Plaintiff realleges paragraph 15 of Count I.

Count IV

As to all defendants, plaintiff alleges:

1-18. Plaintiff realleges paragraphs 1-14 of Count I,

paragraphs 15 and 16 of Count II, and paragraphs 17 and

18 of Count ITI.

19, Each defendant under the authority conferred upon

him by law had the duty and power to prevent and/or cor-

rect the systematic undervaluations and discriminatory

assessments prevailing in Cook County between 1958-1974.

20. Under color of law each defendant knowingly, in-

tentionaliy and purposefully agreed, combined and con-

lias

spired with, and aided and abetted, each other defendant

to maintain such systematic undervaluations and discrimi-

natory assessments and thereby to deprive tens of thou-

sands of Cook County taxpayers, including plaintiff, of

their property without due process of law and to deny

these taxpayers equal protection of the law in violation of

plaintiff’s rights under the Due Process and Equal Pro-

tection clauses of the 14th Amendment of the U.S. Consti-

tution, the Due Process provisions of the Illinois Constitu-

tion of 1870, the Equal Protection provision of the Illinois

Constitution of 1970, the Revenue Act and Article IX, Sec-

tion 1 of the Illinois Constitution of 1870.

21. Plaintiff realleges paragraph 15 of Count I.

Wherefore, plaintiff prays:

a) For judgment against the defendants, and each of

them, for $60,000 plus the sums expended by plain-

tiff in the years 1958 through 1974 in seeking re-

dress from the acts and conduct of defendants, plus

the damage to plaintiff’s business resulting there-

onfrom, plus its costs.

b) For punitive damages in the amount of $250,000.

c) For such other and further relief as may be just.

Fulton Market Cold Storage Company

By /s/ James L. Fox

Its Attorney

—-34a—

APPENDIX D

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

[Filed January 29, 1974]

MOTION OF DEFENDANT, P. J. CULLERTON,

ASSESSOR OF COOK COUNTY,

TO STRIKE AND DISMISS

Now Comes the defendant, P. J. Cullerton, Assessor of

Cook County, by his attorney, Bernard Carey, State’s At-

torney of Cook County, and moves this Court for entry of

an order striking the Complaint and dismissing the cause

of action and in support thereof states as follows:

1. This Court should decline to exercise jurisdiction in

the instant cause:

A. Actions involving assessments do not fall within

the purview of 28 USC 1343 and 42 USC 1983;

B. This Court should abstain from taking jurisdic-

tion;

C. Jurisdiction is barred by $1341;

D. This Court should otherwise decline jurisdiction;

2. The Complaint otherwisé fails to state a cause of ac-

tion;

3. There is no substantial federal question involved in

this cause of action.

Bernard Carey,

State’s Attorney of Cook County

By: /s/ Donald P. Smith

Assistant State’s Attorney

—35a—

APPENDIX E

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

MOTION TO DISMISS

Now Come the defendants, Thomas M. Tully, County

Assessor of Cook County, Illinois and Harry M. Semrow

and Seymour Zaban, members of and constituting the Board

of Appeals of Cook County, Illinois, by their attorney,

Bernard Carey, State’s Attorney of Cook County, Illinois,

and move this court for the entry of an order dismissing

this action, and in support thereof state:

1. The defendants adopt and reallege the allegations

contained in the Motion to Dismiss previously filed herein

by the defendant, P.J. Cullerton, as if the same were fully

set forth herein.

2. This action, as it relates to the assessment and ex-

tension of real estate taxes for the year 1969 is barred by

the decision of the Illinois Supreme Court in People ez rel.

Korzen v. Fulton Market Cold Storage Company, 62 Tll.2d

443 (1976).

3. The Amended Complaint fails to state a claim upon

which relief may be granted, to wit: the assessment prac-

tices challenged by the plaintiff are neither the product of

invidious discrimination, nor are they based upon an un-

reasonable classification of property for the purposes of

taxation.

—36a—

Wherefore, the defendants, Thomas M. Tully, Harry H.

Semrow and Seymour Zaban, pray this court to enter an

order dismissing this action.

Respectfully submitted,

Bernard Carey

State’s Attorney of Cook County

By: /s/ Alan L. Fulkerson

Assistant State’s Attorney

500 Chicago Civic Center

Chicago, Illinois 60602

443-5473