Reply Brief — Rosewell v. LaSalle Nat. Bank

Supreme Court, U.S,

FILED

OCT 24 1980

No. 79-1157

MICHAEL RODAK, JR., CLERK

In THe

Supreme Court of the Anited States

Octroser Term, 1980

EDWARD J. ROSEWELL, etc., et al.,

Petitioners,

vs.

LA SALLE NATIONAL BANK, TRUSTEE, etc.,

Respondent.

On Writ Of Certiorari To The United States

Court Of Appeals For The Seventh Circuit

REPLY BRIEF FOR PETITIONERS

BERNARD CAREY,

State’s Attorney of Cook County, Illinois,

500 Richard J. Daley Center,

Chicago, Illinois 60602,

(312) 443-5460,

Attorney for Petitioners.

Pau P. Breset, Jr.,

Deputy State’s Attorney,

Chief, Civil Actions Bureau,

Henry A. Hauser,

Micnaet F. Baccass,

Assistant State’s Attorneys,

Of Counsel.

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

TABLE OF CONTENTS

PAGE

ARGUMENT:

ER ITS. SE ie ce eS Le oN 1

The Scope Of Jurisdiction Under 28 U.S.C.

§1343(3) Does Not Include Cases Involving Con-

stitutional Challenges To The Collection Or Va-

lidity Of State Taxes. (Reply to Taxpayer’s Ar-

Se Tee ty TR I citibedaaisatnsiclicnintacincnicninictnnsiiincteinnntes 3

I.

The Taxpayer’s Allegations Fail To State An

Equal Protection Claim Under The Fourteenth

Amendment. (Reply to Taxpayer’s Argument I],

I I atc each rea eretcltentaaiainne 6

Ill.

The Illinois Statutory Real Estate Tax Remedy

Is Plain, Speedy And Efficient, Despite Its Fail-

ure To Provide Prejudgment Interest. (Reply to

Taxpayer’s ..rgument III, Br. at 13-31) 8

IV.

The Taxpayer Has Failed To Demonstrate That

An Illinois $1983 Action Would Not Provide A

Plain, Speedy, And Efficient Remedy For Her Fed-

eral Claims. (Reply to Taxpayer’s cline IV,

NaI san stecechbehedineadbeelceiea ta iheeinaintiattabadebenitleaeabiai 12

CONCLUSION 20

TABLE OF AUTHORITIES

Cases

Alberty v. Daniel, 25 lll. App. 2d 791, 323 N.E.2d

I IR I I ations aciasiinessabonvientncatensinaes 15

Allen v. B & O R.R. Co., 114 U.S. 311 (1884) ~.000002..... 4

Board of Trustees v. Holso, 584 P.2d 1009 (Wyo.

MD Salleiclicciicehbists Aiceicachntsndescssh coal oaiididtaeiaspisddecadasdasos Absences napa 12

Boott Cotton Mills v. Lowell, 159 Mass. 383, 34 N.E.

A I Daioh ceisersadihicindsicseinsastticudldpelaibeenasnadslesnnaiineantnvisabslteate 10

Brodsky v. Murphy, 25 N.Y.2d 518, 255 N.E.2d 700

SARIN adiusiscplaiditied bn sidhedent itabaptatantnalapitiian idtbdecieloveuapenmndipionins 10

Carey v. Piphus, 435 U.S. 247 (1978) 2.2... eeeeeeeeee 5

Carter v. Greenhow, 114 U.S. 317 (1884) ....000002.... 4,5

Chaffin v. Taylor, 114 U.S. 309 (1884) 000. 4,5

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

ef NI ER FRESE oie 3, 11, 14, 17, 19, 20

Commonwealth ex rel. Saunders v. Creamer, 345 A.2d

RS Ne Re 5 ea p RELI cP HE e 12

Czajkowski v. State of Illinois, 460 F. Supp. 1265

FOE SARL TREE Pairs een TOs OL ee SON. SO ee 4,5

Department of Employment v. United States, 385 U.S.

RENE ASSES SSSR or OS ee 10

Endruss v. Brookdale Community College, 364 A.2d

1080 (N.J. Super. App. Div. 1976) 2... eee eeeeeeeee 12

Falkenstein v. City of Bismark, 268 N.W.2d 787 (N.D.

1978) I ee CE een OR aR A 12

400 Condominium Assn. v. ‘Tully, No. 78-873 (1st Dist.

NR. Sistas 3-4

Fulton Market Cold Storage Co. v. Cullerton, 528 F.

2d 1071 (7th Cir. 1978), cert. denied, 439 U.S. 1121

RN fia ta tinla de tosis hiatthcdeeasniccbt ane hindieiainigebenidiatbactastiecs 1, 2, 19-20

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

1 caasinainiiaa cnmisiccsipieaadineas 6, 7, 13, 14, 15

lii

Holt v. Indiana Manufacturing Co., 176 U.S. 68 (1900) .. 4,5

Hopkins v. Southern California Telephone Co., 275

I I icone te oe 1) 11

Hoyne v. Hare, 60 Ill. 2d 84, 322 N.E.2d 833 (1974) .... 14

Kish v. Wright, 562 P.2d 625 (Utah 1977) 2000... 12

Lakefront Realty v. Lorenz, 19 Ill. 2d 415, 167 N.E.2d

EE eee tah Da aE 14, 17

LaSalle Nat. Bk. v. Rosewell, 79 C 4864 .......................... 14

Lehnhausen v. Lake Shore Auto Parts, 410 U.S. 356

ag aPC IE GS BOO OW ME Tiida eT 7

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

gb REG RRR Ee AEE ON NAGS SAE TY "ni 4,5

M.B.C., Ine. v. Engel, 397 A.2d 636 (N.H. 1979) ............ 12

Maine v. Thiboutot, ...... US. ......, 100 S.Ct. 2502 (1980)

sinilaanpdanoahsoabe sddeiiasesadidedialitarniniiadbeeicbialiadaadeciaabseiesmipdsuie aay ae

Martinez v. California, ...... US. ..... 100 S.Ct. 588

EERE REEAR ESET aA SOR ao Eien NOE SD SON 12, 15

Matthews v. Rogers, 284 U.S. 521 (1932 ooo 2

Mitchum v. Foster, 407 U.S. 225 (1972) 2... cesses 5

Morton Grove Park Dist. v. American National Bank,

78 Til. 2d 353, 399 N.E.2d 1295 (1980) 000. 11, 14

Neubert v. Foxworthy, 71 Ill. App. 2d 438, 389 N.E.2d

I 8,9

Nutt v. Ellerbe, 56 F.2d 1058 (E.D. S.C. 1932) 0000000... 11

People ex rel. Korzen v. Fulton Market Cold Storage

Company, 62 II]. 2d 443, 343 N.E.2d 450 (1976) ........ 15

People ex rel. Sweitzer v. Orrington Co., 360 Ill. 289,

I I I 19

Perez v. Ledesma, 401 U.S. 81 (1971) ......eceececececcececeeeeee 9

Pleasants v. Greenhow, 114 U.S. 323 (1884) 00.0... 4,5

Poindexter v. Greenhow, 114 U.S. 270 (1884) ..0.0.0.0....... 4,5

Proctor & Gamble Distrib. Co. v. Sherman, 2 F.2d 165

NE tn ARR EETRORRe Gp Riek Ae ye NRSC 11

Reilly v. Robertson, 360 N.E.2d 171 (Ind. 1977) ............ 12

Sampson v. Murray, 415 U.S. 61 (1974) oo... eeeeeeececeeoeees 19

iv

San Antonio Independent Schoo! District v. Rodriguez,

FS EG: | Pema nmen RAE ROnemmrsaooR eer me HSL 8

Shapiro v. Columbia Union National Bank Co., 576

ak SD COD, PMID ccterscissrccsesniatgpeshepeesnenaignal 12

Silverman v. University of Colorado, 555 P.2d 1155

CEI, TTD. cctiscticitesiainnisineniiinsisdicapeenamniapaiicme ane 12

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

EE RIUTED . ‘cuiccsiciahnidclieianeneeae cinta didididaanteiageanaaaae 7

Snowden v. Hughes, 321 U.S. 1 (1944) -..00002.... 1, 7, 8, 16

State Railroad Tax Cases, 92 U.S. 575 (1875) -...000000..... 8

Tobeluk v. Lind, 589 P.2d 873 (Alaska 1979) .................. 12

Trainor v. Hernandez, 431 U.S. 434 (1977) —...00000020...

iasdalnisdbiebieiticadi haddagilaieaabemeeooniamamaaaade 3, 13, 16, 18, 19, 20

Tully v. Griffin, Inc., 429 U.S. 68 (1976) .................... 2, 3, 20

28 East Jackson Enterprises v. Cullerton, 551 F.2d 1093

(7th Cir. 1977), cert. denied, 434 U.S. 835 _................ 18

28 East Jackson Enterprises v. Rosewell, 63 Ill. App.

3d 880, 380 N.E.2d 895 (1st Dist. 1978) -....0020202002.... 13, 19

28 East Jackson Enterprises, Inc. v. Rosewell, 65 Ill.

2d 420, 358 N.B.2d 1139 (1976) 220.2... ecccccssecseenssees 16

Vason v. Cerrano, 330 A.2d 98 (Conn. Sup. 1974) ........ 12

White v. Greenhow, 114 U.S. 307 (1884) 0.0. 4

Constitutional Provisions and Statutes

U.S. Constitution, Fourteenth Amendment .............. passim

i ns RI. sitsicnsccansnorisitclcseminlniatheciestandamsseiaapeceieateeiaiia passim

Be EAs PRIN). exsessoaissinoviecsonssnsevigntanmnssioctimmunaaaianial 1, 3,5

42 U.S.C. $1983 5 ilepaieiciideiaaiehaeeaneiosnaaaiae passim

ail, Bev. Stat. 19T7, Ch: BOD, pew. GOT enicci cn cccercccersiocsaneh 11

SUL, Show. Eibek, LOTR: ie FU Oe, & anise scccibcncasinicaiaticenteiancmaetiat 9

SE Cpa. BRO. BET CHG ecsenicccstnonensiniccheistontamaiinanithemataas 18

No. 79-1157

In THE

Supreme Court of the United States

Ocroser TERM, 1980

EDWARD J. ROSEWELL, etc., et al,

Petitioners,

vB.

LA SALLE NATIONAL BANK, TRUSTEE, etc.,

Respondent.

On Writ Of Certiorari To The United States

Court Of Appeals For The Seventh Circuit

REPLY BRIEF FOR PETITIONERS

ae oe

ARGUMENT

Introduction

It may be helpful to restate the collector’s* position in

order to focus the various issues which are argued in the

taxpayer’s brief, and to which this reply is directed. The

collector maintains first that §1343(3) jurisdiction is

lacking in this case because the subject matter involves

a constitutional challenge to the collection of local real

estate taxes. As an allied argument, the collector asserts

that the complaint fails to allege intentional or pur-

poseful violation of the taxpayer’s fourteenth amend-

ment rights with the specificity which this Court has

demanded over the years. See, Snowden v. Hughes, 321

U.S. 1, 7 (1944). Finally, even if the district court had

jurisdiction under §1343(3), and even if the complaint

stated a specific cognizable claim of tax discrimination,

the taxpayer was accorded a plain, speedy and efficient

remedy in state court, and, of course, a federal damage

remedy for her federal claims under Fulton Market Cold

Storage Co. v. Cullerton, 528 F.2d 1071 (7th Cir. 1978),

cert. denied, 439 U.S. 1121 (1979).

It is signally important that the taxpayer has failed to

allege inability to pay the 1977 real estate taxes due on

her property. Indeed, the complaint specifically asserts

that the taxpayer is “. . . able financially to pay her tax-

es in full and sue for a refund, albeit at substantial

expense, loss and burden.” (Comp. Par. 16; A. 9). Ir-

reparable injury is non-existent in a tax case where

* Petitioners Edward J. Rosewell, County Treasurer and Ex-

Officio Collector of Cook County, and Thomas M. Tully,

former Assessor of Cook County are the county tax officials

who performed duties imposed by the Illinois Revenue Act.

Hereinafter they will be referred to as “the collector.”

_

the taxpayer has the funds to pay the tax and, thus, the

ability to forestall the loss of the property brought about

by the judicial sale procedures of the Illinois Revenue

Act. As argued in the initial brief, vital considerations

of federalism, comity and equitable restraint require the

federal district court “. .. to refrain from interfering

with a state’s collection of its revenue except in cases

where an asserted federal right might otherwise be

lost.” Tully v. Griffin, Inc., 429 U.S. 68, 73 (1976). Again,

it is hard to see how any of the taxpayer’s federal rights

will be lost where she has available to her (1) the stan-

dard Illinois tax remedy; (2) an action under §1983 in

state court for damage to her federally protected rights;

and (3) a damage action in federal court under Fulton

Market, supra.

Therefore, whether one focuses upon the congressional

policy established in §1341 regarding state remedies, or

upon the historic precedential limitations of federal

equity,* it is clear that the federal injunction sought by

the taxpayer herein is totally unwarranted. The pattern

of state and federal real estate tax remedies produced

by acceptance of the collector’s position herein has the

beneficial effect of striking a fair balance among the

varied interests presented in the case.

- _ Matthews v. Rogers, 284 U.S. 521 (1932) this Court held

at:

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 is involved, Jud. Cod. Sec.

237, or to his suit at law in the federal courts if the essen-

tial elements of federal jurisdiction are present. (Citations

omitted) (Emphasis supplied).

Id. at 526. See also: Fulton Market Cold Storage Co. v. Culler-

ton oe 1071, 1076 (7th Cir. 1978) cert. ied, 489 U.S.

x

If a taxpayer cannot meet the statute’s condition

precedent of tax prepayment, then the Illinois statutory

legal remedy is unavailable to that taxpayer. Such a

taxpayer would, therefore, be entitled to litigate the

valuation claims in equity in state court, and to seek in-

junctive relief. Clarendon Associates v. Korzen, 56 Ill. 2d

101, 106-107, 306 N.E.2d 299, 302-303 (1973). If the tax-

payer is able financially to pay the taxes in full and seek

a refund (Comp., Par. 16; A. 9), then the threat of loss of

the real estate is non-existent, and the taxpayer can

follow out such state or federal damage remedies as are

available and appropriate to repair the monetary

damage caused by the alleged violation of the taxpayer’s

constitutional or statutory rights. The opinion of the

court below frustrates this pattern, and sanctions un-

warranted federal anticipatory litigation of state tax

valuations contrary to the letter and spirit of Tully v.

Griffin, Inc., 429 U.S. 68 (1976) and Trainor v. Her-

nandez, 431 U.S. 434 (1977).

I.

THE SCOPE OF JURISDICTION UNDER 28 U.S.C.

§1343(3) DOES NOT INCLUDE CASES INVOLVING

CONSTITUTIONAL CHALLENGES TO THE COLLEC-

TION OR VALIDITY OF STATE TAXES.* (Reply to

Taxpayer’s Argument I, Br. at 4-9.)

The collector maintains that §1343(3) does not support

jurisdiction of a tax case like that at bar. The focus is

* Collector’s Arguments I and II herein are jurisdictional

arguments, and, thus, alternative to the §1341 questions

discussed in Arguments III and IV of this . eply Brief. The

taxpayer's brief, at 33 n. 28, creates the misleading impres-

sion that the collector has taken a position in a pending II-

linois tax injunction appeal contrary to Argument IV herein.

400 Condominium Assn. v. Tully, No. 78-873 (1st Dist. wel

n that case, an appeal in which the taxpayer successfully

challenged an assessment as one unauthorized by law, the tax-

(Footnote continued on following page)

ro wo

not upon whether the interest asserted is a personal right

or a property right, but rather, historically, whether

the tax related rights involved herein are “civil rights.”

This Court held that they were not in Holt v. Indiana

Manufacturing Co., 176 U.S. 68, 72 (1900). Moreover, in

those portions of the Virginia Bond coupon cases where

relief was sought under the Civil Rights Act, jurisdic-

tion was denied. Carter v. Greenhow, 114 U.S. 317 (1884)

and Pleasants v. Greenhow, 114 U.S. 323 (1884). It is im-

portant to note that relief in those cases was granted to

Virginia Bond coupon holders (1) who brought detinue

actions in state court, Poindexter v. Greenhow, 114 U.S.

270 (1884); (2) who brought damage actions in federal

court premised on federal question jurisdiction, White v.

Greenhow, 114 U.S. 307 (1884); (3) who brought trespass

actions in state court, Chaffin v. Taylor, 114 U.S. 309

(1884); (4) and who brought injunctive actions in federal

court based on federal question jurisdiction, Allen v.

B & O R.R. Co., 114 U.S. 311 (1884). These cases sup-

port denial of federal jurisdiction in the case at bar.

More recently the district court in Czajkowski v. State

of Illinois, 460 F. Supp. 1265 (N.D. Ill. 1977) cited the

foregoing cases, and the fact that they were distinguish-

ed, not overruled, in Lynch v. Household Finance Cor-

poration, 405 U.S. 588 (1972), to support the proposi-

footnote continued

ayer had moved for attorneys fees based in part on 42 U.S.C.

51988. Tully objected on the apy that the action was not

ased on federal law, but rather on a provision of the Illinois

Condominium Act. The portion of the “Objections” quoted by

the taxpayer omits the two cases which were cited to support

the assertion, i.e. “See h v. Household Finance at A 92

S. Ct. 1113 at 1117 (Fn. 6), and Czaykowski v. State of Illinois,

460 F. ae 1265 at 1277 (N.D, Ill. 1977).” It is therefore

clear that the collector has consistently maintained that, if

civil rights jurisdiction does apply to tax cases (as opposed

in Arg. I herein), then Illinois courts will hear them (as main-

tained in Arg. V herein).

~

tion that §1343(3) jurisdiction should be denied in tax

cases.

The history of the Civil Rights Act clearly indicates

that it was enacted to create (1) “a species of tort liabili-

ty.” Carey v. Piphus, 485 U.S. 247, 257 (1978); (2) which

could be remedied in the federal courts. Mitchum v.

Foster, 407 U.S. 225, 239 (1972). The need for the law

was rooted in the official lawlessness following the Civil

War, when certain state courts were effectively closed to

black citizens. Nowhere in the legislative history is there

any indication that this “trouble” extended to tax

matters, or to cases involving the validity or collection of

state taxes. As a matter of history, state courts have

generally been available to protect rights affected by

taxation. See e.g. the Virginia Bond Coupon cases,

Poindexter v. Greenhow, 114 U.S. 270 (1884) and Chaffin

v. Taylor, 114 U.S. 309 (1884). The taxpayer’s attempt to

distinguish this Court’s treatment of Pleasants, Carter

and Holt in Lynch footnote 6 misses the point. There is

no question that the footnote correctly and accurately

observes that those cases “. . . were consistent with con-

gressional restrictions of federal jurisdiction in this

special class of cases and with longstanding judicial poli-

cy.” Lynch, 405 U.S. 542-43 n.6. What the Court did not

decide in Lynch was the question elucidated in Czaj-

kowski v. State of Illinois, supra, as to the precedential

value of Carter, Pleasants, and Holt on the scope of civil

rights jurisdiction in tax cases. Accordingly, the tax-

payer’s efforts to distinguish those cases in light of Lynch

must fail.

—

II.

THE TAXPAYER’S ALLEGATIONS FAIL TO STATE

AN EQUAL PROTECTION CLAIM UNDER THE

FOURTEENTH AMENDMENT. (Reply to Taxpayer's

Argument II, Br. at 9-13.)

The collector maintains that the taxpayer has failed to

allege facts which show intentional or purposeful viola-

tion of fourteenth amendment rights. At bottom, the

equal protection clause is a limitation upon state

classifications, and “. .. protects the individual from

state action which selects him out for discriminatory

treatment by subjecting him to taxes not imposed on

others of the same class.” Hillsborough v. Cromwell, 326

U.S. 620, 623 (1946).

This Court has enforced the fourteenth amendment to

prohibit state tax systems which have, de facto, es-

tablished specific, disadvantaged classes. The cases

which the taxpayer has cited at page 10 of her Brief

(Raymond. etc.) are specific examples. It should be

carefully noted, however, that those cases all involved

corporations, and dealt with a specific problem rooted in

the history of the state’s taxation of corporate real es-

tate. Prior to the recognition that corporations could

constitutionally be treated differently from individuals,

states assessed certain types of industrialized corporate

real property (i.e., railroads, steel mills, etc.) at full

value as usually was required by the state constitution.

The difficulty arose when other property, particularly

residential property, was often substantially un-

derassessed. When the railroads and steel companies

complained about this, the states maintained that their

constitutions required “full value” assessments, and that

the railroads and steel mills were, indeed, assessed at

“full value.” This position was often combined with the

advice that the corporate complainant take action to see

that the other underassessed property was brought up to

— =

full value. See e.g. Hillsborough v. Cromwell, 326 U.S.

620, 623-26 (1946); Sioux City Bridge Co. v. Dakota

County, 260 U.S. 441 (1923).

The Raymond line of cases authorizes relief in such

situations, where “. . . the practical effect of the official

breach of law is the same as though the discrimination

were incorporated in and proclaimed by the statute.”

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

The Raymond problem has, of course, been diminished

substantially by this Court’s recognition of the states’

power to make legitimate classifications reasonably bas-

ed upon the corporate form of the taxpayer. Lehnhausen

v. Lake Shore Auto Parts, 410 U.S. 356 (1973).

The taxpayer asserts that the foregoing distinction is

“spurious” and that “There is no practical difference

between a system which deliberately assesses railroad or

coal or bridge companies on a discriminatory basis in

violation of uniformity requirements and a system

which with like deliberateness discriminates against tax-

payers such as the one at bar.” Taxpayer’s Br. at 12. Ig-

noring the historical significance of the Raymond line of

cases, this statement confuses the classification of tax-

payers on the basis of corporate nature, with the

implementation of a tax system which sometimes

overassesses property. The taxpayer’s argument simply

proves too much. If accepted, it would justify an equal

protection claim for every overassessment, since no tax

system is perfect, and all tax systems worthy of the

name are deliberately and systematically implemented.

More than 100 years ago the Court observed in an II-

linois tax case—“. . . (P)erfect equality and perfect

uniformity of taxation as regards individuals or corpora-

tions, or the different classes of property subject to

taxation, is a dream unrealized.” State Railroad Tax

Cases, 92 U.S. 575, 612 (1875).

a om

In a similar vein, the Court observed a century later,

in San Antonio Independent School District v. Rodriguez,

411 U.S. 1 (1978), that:

“No scheme of taxat’on, whether the tax is imposed

on property, income, or purchases of goods and ser-

vices, has yet been devised which is free of all dis-

criminatory impact. In such a complex area in

which no perfect alternatives exist, the Court does

well not to impose too rigorous a standard of

scrutiny lest all local fiscal schemes become sub-

jects of criticism under the Equal Protection

Clause.

San Antonio Independent School District v. Rodriguez,

411 U.S. 1, 41 (1973). While Rodriguez unquestionably

deals with the broader question of tax source classifica-

tions, the underlying theme is consistent.

In the final analysis the taxpayer’s complaint shows

an ongoing tax dispute between the collector and the

taxpayer based on an alleged overassessment resulting

from implementation of the Revenue Act. That, without

more, is not enough to state a federal constitutional

claim. Snowden, 321 U.S. 1, 9 (1944).

ITI.

THE ILLINOIS STATUTORY REAL ESTATE TAX

REMEDY IS PLAIN, SPEEDY AND EFFICIENT,

DESPITE ITS FAILURE TO PROVIDE PREJUDG-

get ss (Reply to Taxpayer’s Argument III,

r. a

The taxpayer argues that the Illinois statutory remedy

for challenging taxes in alleged overassessment cases is

not “plain, speedy, and efficient” because the statutory

remedy fails to award prejudgment interest* on refunds.

* The o axpever su uggests ts that Neubert v. Foxworthy, 71 Il.

App. 3d d 898 (4th Dist. 1979) ladicahes that

the Reais is my Ase usual post-judgment interest authoriz-

(Footnote continued on following page)

— =

Moreover, it is clear that the taxpayer has, by this argu-

ment, focused only upon the state statutory remedy.*

This truncated argument incorrectly avoids considera-

tion of state and federal §1983 damage remedies

available to the taxpayer. See Arg. IV, infra at 18-20.

Furthermore, since the taxpayer’s claim is not premised

upon diversity or federal question jurisdiction, but

rather upon the civil rights act, the more appropriate

analysis is that directed towards cases dealing with

§ 1983 claims.

As we noted in our opening brief (Pet. Br., at 40), the

taxpayer’s claim that the Illinois statutory system is not

plain, speedy and efficient due to the denial of prejudg-

ment interest, necessarily creates the issue of whether or

not prejudgment interest on tax refunds is an element of

footnote continued

ed under Illinois law. Ch. 74, par, 3, Ill. Rev. Stat. 1979.

However, Neubert is authority for the Fourth Illinois

Appellate District only, whereas the taxpayer’s property lies

in the First District, near Chicago. The Illinois Supreme

Court has not had the last word on this issue because the tax-

peret in Neubert failed to petition the Supreme Court of II-

inois for leave to appeal.

* The Amicus, Cook County Lege Assistance Foundation,

asserts in sum, “This amicus brief is made to emphasize that

the current limited state remedy in Cook County is very

cumbersome and is unusable by an individual taxpayer

without an attorney knowledgeable in the complex tax review

system used only in Cook County.” Amicus Br. at 5. Unfor-

tunately, in a county the size of Cook County (the second

largest in the country) even despite the best efforts of the Il-

linois General Assembly and local assessment officials to ac-

commodate the needs of homeowners, “the roncare for mass

assessment and collection of state taxes and for administration

and udication of taxpayers disputes with tax officials are

generally complex and cerns designed to — accord-

ing to established rules .. . If federal declaratory relief

were available to test state tax assessments, state tax ad-

ministration might be thrown into disarray, and taxpayers

might escape the choy’ A E sence 5 requirements imposed

a i law.” Perez v. sma, 401 U.S. 81 at 127 n. 17

al

-_—

damages in over-assessment cases. If there is no legal

right to prejudgment interest on a refund, then it would

be difficult to see the inadequacy of the Illinois statutory

remedy. The taxpayer, however, has ignored this basic

premise and, rather, has argued cases (Resp. Br., at 19-

27) which we have distinguished in our opening Brief.

(Pet. Br., at 47-49). Indeed, the taxpayer does this not-

withstanding her admission that the Court has not yet

decided whether the failure of a state system to award

prejudgment interest on a tax refund renders that

system inadequate within the meaning of 28 U.S.C.

§1341. (Resp. Br. at 19, citing Department of Employ-

ment v. United States, 385 U.S. 355, 358 (1966).)

In this context the collector cited the majority rule,

followed in nineteen state and territorial jurisdictions,

which holds that prejudgment interest on state and local

tax refunds is not warranted if there is no statutory

authorization for such interest. (Pet. Br. at 41-43) It is

this majority rule which, we submit, should be con-

sidered if the Court should choose to answer the issue

specifically left open in the Department of Employment

case.

The taxpayer also criticizes the collector’s reliance on

Boott Cotton Mills v. Lowell, 159 Mass. 383, 34 N.E. 367

(1893) (no interest on overassessments, but interest on

void assessments) and Brodsky v. Murphy, 25 N.Y.2d

518, 255 N.E.2d 700 (1969) (no interest on over-

assessments, but interest on unconstitutional and void

taxes). The taypayer states:

. . . When the taxing statute involved is wholly

void or unconstitutional or the challenged tax has

been imposed on exempt vroperty those cases...

permit interest without statutory authorization.

(Resp. Br. at 28.)

However, in Illinois if a tax is void or is levied on ex-

empt property, one is entitled to injunctive relief against

=)

it. See: Clarendon Associates v. Korzen, 56 Ill. 2d 101,

306 N.E.2d 299 (1973). Accordingly there is no issue as

to prejudgment interest in those situations since

equitable relief is available, as in Illinois.

In a like manner, the dicta relied on by the taxpayer

in Proctor & Gamble Distrib. Co. v. Sherman, 2 F.2d 165

(S.D. N.Y. 1924), Hopkins v. Southern California

Telephone Co., 275 U.S. 393 (1928), and Nutt v. Ellerbe,

56 F.2d 1058 (E.D. S.C. 1932), is unpersuasive. Those

cases were not overassessment cases. Rather, the tax-

payers in those cases challenged the authority to levy the

entire tax. Under Illinois law, however, equitable relief

could issue to enjoin illegal taxes such as those. Accord-

ingly, the cited cases are irrelevant to the case at bar

because Illinois provides equitable relief where the tax

is unauthorized by law.

Moreover, the collector has a claim of right to the tax-

es in issue by way of his lien even prior to the issuance

of the tax bills.* This lien and claim of right to the tax

funds is not affected until the court adjudicates the cor-

rectness of the assessment. See Morton Grove Park Dist.

v. American National Bank, 78 Ill. 2d 353, 364-365, 399

N.E.2d 1295 (1980). Accordingly, since the collector has

a claim of right to the tax funds while they are in litiga-

tion, there is no due process issue in question. Moreover,

the lien or claim of right created by the statute ex-

tinguishes, pro tempore, the ownership interest upon

which the taxpayer must premise the right to interest.

Clearly the taxpayer has no interest in prepaid taxes un-

* Ill. Rev. Stat. 1977, ch. 120, par. 697 provides, “The taxes

upon reai property .. . shall be a prior and first lien upon

such real property, superior to all other liens and encum-

brances, from and including the first coy of January in the

year in which the taxes are levied until the same are paid or

until the real property is sold pursuant to this Act... .”

a

til such time as an overassessment is judicially establish-

ed.

We accordingly conclude that the Illinois statutory

remedy which denies prejudgment interest on tax

refunds does not render that remedy inadequate with-

in the meaning of §1341.

IV.

THE TAXPAYER HAS FAILED TO DEMONSTRATE

THAT AN ILLINOIS §1983 ACTION WOULD NOT

PROVIDE A PLAIN, SPEEDY AND EFFICIENT

REMEDY FOR HER FEDERAL CLAIMS. (Reply to Tax-

payer’s Argument IV, Br. at 31-40.)

Introduction

The collector has argued in his opening brief that the

ability of the taxpayer to challenge her real estate tax

assessment by a §19838 action in the Illinois courts

precludes federal jurisdiction. This Court has fully ap-

proved the power of the state court to entertain state

§1983 actions. Martinez v. California, ..... UR. sn, 100

S.Ct. 553 (1980); Maine v. Thiboutot, ..... U.S. ...... 100

S.Ct. 2502 (1980). The great weight of authority in the

state courts is consistent with this holding,* and the

* In addition to those cases set out at 29-30 of the collector’s

opening brief, the following can be included: Supporting State

Jurisdiction of §1983 actions, Alaska-Tobeluk v. Lind, 589

P.2d 873 (Alaska 1979); Colorado-Silverman v. University of

Colorado, 555 P.2d 1155 (Colo. 1976); Connecticut-Vason v.

Cerrano, 330 A.2d 98 —- Sup. 1974); Indiana-Reilly v.

Robertson, 360 N.E.2d 171 (Ind. 1977); Missouri-Shapiro v.

Columbia Union National Bank Co., 576 S.W.2d 310 (Mo.

ee): New Hampshire-M.B.C., Inc. v. a 397 A.2d 636

(N.H. 1979); New Jersey-Endruss v. Brookdale Communit

College, 364 A.2d 1080 (N.J. Super. “°° Div. 1976); Nort

Dakota-Falkenstein v. City of Bismark, 208 N.W.2d 787 (N.D.

1978); Pennsylvania-Commonwealth ex rel. Saunders v.

Creamer, 345 A.2d 702 A Hue 1975); Utah-Kish v. Wright, 562

P.2d 625 ae 1977); oming-Board of Trustees v. Holso,

584 P.2d 1009 (Wyo. 1978).

_ on

taxpayer has not attempted to distinguish this obvious

trend in civil rights law. Instead the taxpayer has

questioned the specific availability of §1983 to reach the

case at bar. Premising her argument primarily on

Hillsborough v. Cromwell, 326 U.S. 620 (1946), the tax-

payer contends that (1) the collector’s direct precedent is

distinguishable; (2) that it is uncertain whether I]linois

is “mandated” to accept §1983 tax claims; (3) that it is

uncertain whether Illinois will apply federal equity law

as against prior decisional law; (4) and that Trainor v.

Hernandez, 431 U.S. 434 (1977) does not require absten-

tion in the case at bar.

At the outset, it should be clear that if the taxpayer’s

right to state relief is uncertain, that uncertainty is of

her own making. The difficulty surrounding the §1983

question has arisen precisely because the taxpayer has

failed to file her §1983 claims in state court. Thus, not

having exposed her federal claims under §1983, she can

hardly say that Illinois will not hear them. There is no

dispositive state precedent against her position, as there

was against the taxpayer in Hillsborough, where the

Court had the benefit of a specific holding by the

highest state court on the precise issue necessary for

deciding the §1341 issue. Here, as in 28 East Jackson

Enterprises v. Rosewell, 63 Ill. App. 3d 880, 380 N.E.2d

895 (1st Dist. 1978), a taxpayer attempts to take “.. .

advantage of an unresolved question of Illinois law, a

gray area of Federal-State relations, and the delays in-

herent in the judicial process to delay the sale of its tax

delinquent property until after the following year’s taxes

have also become delinquent, after which a new suit is

filed raising the same precise issues and beginning the

process anew.” (63 Ill. App. 881-82, 380 N.E.2d at 896).*

* This same pattern appears in the case at bar where the

taxpayer has filed an identical suit challenging her 1978 tax-

(Footnote continued on following page)

=)

The taxpayer asserts that Lakefront Realty v. Lorenz,

19 Ill. 2d 415, 167 N.E.2d 236 (1960) and Clarendon

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

(1973) demonstrate antipathy to her underlying claim

for prejudgment interest upon tax refunds. However she

has not presented that matter as a §1983 claim despite

the fact that Illinois equity law is flexible, see Hoyne v.

Hare, 60 Ill. 2d 84, 322 N.E.2d 888 (1974), and

that the Illinois Supreme Court will not tolerate the

taking of property without due process of law. Morton

Grove Park District v. American National Bank, 78 Ill.

2d 353, 399 N.E.2d 1295 (1980). One might wonder why

counsel as obviously resourceful and ingenious as tax-

payer’s would not present those claims to Illinois courts.

The answer is, of course, that a litigation strategy de-

signed to rely on Hillsborough “uncertainty” must avoid

resolution of developing Illinois law lest the predicate of

the argument be destroyed.

The taxpayer urges that the federal district court

cases (Horn, Green and Advertiser Co.) cited in the

collector’s initial brief at 30 are distinguishable because

(1) “. . . none of these cases justifies its holding with any

detailed analysis of the relationship between §§ 1341 and

1983. 604 F.2d at 537;” (2) and that other declaratory

remedies were available in these cases. What the

taxpayer fails to note is that no federal court, save that

footnote continued

es. LaSalle Nat. Bk. v. Rosewell, 79 C 4864. The collector

demanded and was accorded a full preliminary injunction

hearing on the matter, but, because the case at bar is still

unsettled, the district court has continued a temporary in-

junction generally. Any resemblance between 28 Kast Jackson

and LaSalle is not coincidental since each was represented by

the same counsel. The pyramiding of injunctions in 28 East

Jackson and the case at bar appears to be unavoidable as long

as taxpayer and collector steadfastly adhere to their respec-

tive positions.

—

whose decision is here under review, has held that a

state civil rights action fails to meet the requirements of

§1341. Moreover, we have earlier demonstrated that

§ 1341 was impelled to prevent abuse of diversity juris-

diction, not federal question jurisdiction. There is

nothing in §1983, particularly after Martinez and

Thiboutot which guarantees litigants a federal forum in

tax cases. Even if one were to stop short of such a

position, when §1341 is read together with §1983, it

seems clear enough that the policy of each statute is

forwarded by a state §1983 action. Again, the taxpayer

has cited no contrary Illinois precedent.

Similarly, whether or not Illinois must accept jurisdic-

tion of a §1983 tax claim is only a question here because

the taxpayer failed to raise it in the state court. It is

clear that Martinez and Thiboutot bind the courts of

Illinois under the Supremacy Clause. Even before the

decision of those cases, the Illinois Appellate Court in

taxpayer’s district in Alberty v. Daniel, 25 Ill. App. 2d

791, 323 N.E.2d 110 (1st Dist. 1974) ruled that §1983

actions could be brought in Illinois courts. In short,

Hillsborough requires more than the conjured “uncer-

tainty” of a taxpayer who has deliberately withheld her

claims from the state court.

The taxpayer also maintains that there is doubt or

uncertainty whether the courts of Illinois will apply

federal equity law in §1983 cases. The taxpayer

hypothesizes that the Illinois courts may not “feel

bound” by such federal principles. Having said as much,

the taxpayer raises no precedent to support this baseless

affront to the judiciary of a state whose courts possess a

heritage of respect for the constitution and laws of the

United States.

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

Company, 62 Ill. 2d 448, 343 N.E.2d 450 (1976), cited by

ee

the taxpayer as an example of Illinois courts’ reticence

to apply appropriate federal law, no question of the

relationship between state exhaustion requirements and

§ 1983 claims was presented because the appellate court

decision there under review was premised solely on

state grounds. Similarly, in 28 Hast Jackson Enter-

prises, Inc. v. Rosewell, 65 Ill. 2d 420, 358 N.E.2d 1139

(1976) the taxpayer refused to present its federal claims

to the Illinois courts for determination. Far from

demonstrating “antipathy ... to the imposition of

federal jurisprudence upon it... .”, that case stands as a

rejection of a taxpayer’s facile attempt to manipulate

federal and state courts in a manner which threatened

to bring embarrassment to both. It is precisely at this

point, where “the role of the Illinois judicial system

closely resembles that of a master in chancery for the

federal district court” (65 Ill. 2d at 425), that vital con-

siderations of federalism, comity and equitable restraint

are implicated.

Finally, the taxpayer’s attempt to rebut the collector’s

Younger-Trainor analysis is very seriously flawed. In

her Younger analysis, the taxpayer states, “Younger

abstention has no place where, as here, the federal

constitutionality of a state law is not under attack.” Br.

at 37). However, as we have demonstrated in Argument

II heretofore, a claim of tax discrimination under

Snowden must assert that the state, in effect, has passed

an unconstitutional classification law by its purposeful

and intentional assessment action, “. . . so that the

practical effect of the official breach of law is the same

as though the discrimination were incorporated in and

proclaimed by statute.” Snowden v. Hughes, 321 U:S. 1, 9

(1944). Therefore, if the taxpayer’s complaint does state

a cognizable claim of tax discrimination, then it surely

presents a Younger challenge.

=, =

Proceeding with her Younger analysis, the taxpayer

maintains that “. . . no unsettled questions of state law

are involved .. .”, citing the Lakefront and Clarendon

holdings on the question whether Illinois tax refund

statute’s failure to authorize prejudgment interest ren-

ders it an inadequate remedy. This position has been

treated in Argument III hereinbefore, and is a separate

question. The taxpayer has subtly shifted her focus from

the §1983 remedy onto the statutory remedy. But the

real question here is whether comity requires that II-

linois courts be permitted to determine the scope of a

state §1983 action. That question is undecided by Illinois

courts because the taxpayer has chosen instead to liti-

gate in federal court. The collector submits that it is

more sensible to allow the state courts the necessary

freedom to shape a relatively new state court tax

remedy under §1983, than to run the risk of turning

even the highest court of Illinois into a master in

chancery for a district court judge.

Third, the taxpayer maintains that “. . . there is no

prior pending state suit .. .” (Br. at 38) with which a

federal injunction will interfere. This argument fun-

damentally misapprehends the importance of the tax

sale proceedings authorized by state statute. Moreover,

it seems clear enough from the pleadings (A. 10) that

interference with the proposed sale is precisely what the

taxpayer seeks to achieve by her federal injunctive suit.*

* The taxpayer confuses Younger abstention with Pullman

abstention when she argues that she should be permitted to

return to federal court “. . . in the event the Illinois courts

decline to grant_adequate relief.” Br. at 38 n. 36. The cases

she cites there (England, Sachs, and Mr. Boston) deal with the

uestion of presentation of separate state and federal claims.

g 1341 requires the taxpayer to present all her claims in the

state court. The Seventh Circuit has held that an “England”

(Footnote continued on following page)

a"

It is plain that the taxpayer’s suit would subvert a

fundamental state objective within the meaning of

Trainor v. Hernandez, particularly if injunctions were

freely granted upon the basis established by the court

below.

In a similar vein, though in a different section of her

brief, the taxpayer argues that she contests only the

“... discriminatory portion of her tax bill... .”, and “the

flow of lawful revenue represented by the proper portion

of the tax would continue uninterrupted.” Br. at 25 n.

20. This contention begs the question, because it is for

the courts, not the taxpayer, to decide whether the

allegations of a complaint, assuming a claim is stated,

warrant relief, and to decide how much of the tax

payment, if any, should be refunded.

The taxpayer argues that “The Tax Injunction Act

subsumes the policy concerns behind the Younger

decision, Jd. at 444 n. 8, so that a demonstration that the

Illinois remedy is not plain, speedy and efficient for

purposes of §1341 suffices to establish the inapplica-

bility of Younger,” Br. at 39. This position conflicts with

the legislative intent of the tax injunction act which

sought to prevent out-of-state corporations from tying up

state taxes in federal courts when “. . . no federal

question [is] involved .. . ” [81 Cong. Rec. 1417 (1937),

Remarks of Senator Bone, a co-sponsor of the bill. ]

Where the extension of federal jurisdiction, like §1983,

comes into conflict with important state court proceed-

ings, the broader concerns of comity and equitable

restraint set out in Younger and Trainor come into

footnote continued

reservation is not possible in a §1341 tax case. 28 Hast

Jackson Enterprises _v._Cullerton, 551 F.2d 1093 (7th Cir.

1977) cert. denied, 434 U.S. 835.

a ae

play. Moreover, as the Court pointed out in Trainor,

431 U.S. 434, 441 (1977) the question is not only whether

available remedies at law in federal court would bar

injunctive relief, but also whether there are remedies

available in the pending state proceeding. However, in

Illinois tax cases where the statutory remedy is, as here,

available to the taxpayer because she claims “to be able

financially to pay the tax and sue for a refund...” (A.

9), the taxpayer cannot suffer loss of the property. While

the taxpayer may suffer “. . . substantial loss, expense

and burden,” that sort of monetary injury is remediable

by the federal §1983 damage remedy recognized by the

Seventh Circuit in Fulton Market Cold Storage Co. v.

Korzen, 528 F.2d 1071 (7th Cir. 1978), cert. denied 439

U.S. 1121 (1979). This Court has held that monetary

injury (here primarily prejudgment interest claimed by

the taxpayer) which is compensable in a damage action,

is not irreparable injury sufficient to support an injunc-

tion. Sampson v. Murray, 415 U.S. 61, 88-92 (1974).

In final summary, if the history of real estate tax

litigation in Illinois is any guide, then the Court can

assume that taxpayers will exploit fully the opportunity

for delay and confusion offered by anticipatory litigation

of state tax valuations. See People ex rel. Sweitzer v. Or-

rington Co., 360 Ill. 289, 293, 195 N.E. 642 (1935); Claren-

don Associates v. Korzen, 56 Ill. 2d 101, 106, 306 N.E.2d

299, 302; 28 East Jackson Enterprises v. Rosewell, 63 Ill.

App. 3d 880, 881-82, 380 N.E.2d 895, 896 (1st Dist.

1978). Moreover, if allegations as vague as those set

out in the complaint are sufficient to state a claim

(contrary to the collector’s position, Argument II,

supra), then any taxpayer harboring a valuation dispute

against the assessor may file an injunction claim in

federal court with the hope that the threatened delay may

prove a valuable bargaining chip in settlement discus-

sions with county tax officials. For this very reason the

~~

Clarendon court limited injunctive relief in real estate

tax valuation cases to those in which a traditional

equitable ground was combined with unavailability of

the statutory remedy. The collector suggests that the

§1983 civil rights damage remedy recognized by the

Seventh Circuit in Fulton Market (and, therefore,

applicable in a state court §1983 action by virtue of the

Supremacy Clause) provides the federal analog to the

Illinois remedy in cases where injunctive relief is sought

in federal court. Where, as here, the federal damage

remedy is available to the taxpayer, and where the

taxpayer has the ability to pay the tax, then federal

injunctive relief should be denied on the authority of

Tully v. Griffin, Inc., 429 U.S. 68 (1976) and Trainor v.

Hernandez, 431 U.S. 434 (1977).

CONCLUSION

For the foregoing reasons, the collector respectfully

submits that the opinion and judgment of the Court of

Appeals should be reversed, and the order of the

District Court affirmed.

Respectfully submitted,

BERNARD CAREY,

State’s Attorney of Cook County, Illinois,

500 Richard J. Daley Center,

Chicago, Illinois 60602,

(312) 443-5460,

Attorney for Petitioners.

Pauu P. Bresen, Jr,

Deputy State’s Attorney,

Chief, Civil Actions Bureau,

Henry A. Hauser,

MicnareL F. Baccassx,

Assistant State’s Attorneys,

Of Counsel.