Appendix — First National Bank & Trust Co. of Evanston v. Rosewell

82-2115 “

No. JUN 24 1983

In THE Md

Ts

Supreme Court of the United States

Octoser Term, 1982

FIRST NATIONAL BANK AND TRUST COMPANY OF

EVANSTON, as Trustee under a Trust

Agreement, dated March 17, 1975, and known as Trust R-1809,

Appellant,

Vv.

EDWARD J. ROSEWELL, County Treasurer and Ex-Officio

County Collector of Cook County, Dlinois;

THOMAS C. HYNES, Assessor of Cook County, Dlinois; and

HARRY H. SEMROW and SEYMOUR ZABAN, Commissioners

of the Board of (Tax) Appeals of Cook County, Dlinois,

Appellees.

On Appeal From The Supreme Court Of Illinois

APPENDIX TO JURISDICTIONAL STATEMENT

JAMES A. ROONEY

69 West Washington Street

Suite 2313

Chicago, Illinois 60602

(312) 332-2600

Attorney for Appellant

Midwest Law Printing Co., Chicago 60611, (312) 321-0220

—

ole ae a

10.

INDEX TO APPENDIX

Opinion of Supreme Court of Illinois ......

Opinion of Appellate Court of Illinois .....

Opinion and Orders of Trial Court ......

Denial of Petition for Rehearing in Su-

preme Court of Illinois. .............cccccscesees

I A IIE Sovsscesctésarvoncesscsboivenusenssees

Order Extending Time to Docket Appeal

I Ti. SUI cicbouvabsentdbuhenosseessascosvbeisies

Petition for Rehearing filed in Supreme

BE TIE ics cctisssecounmitenoassciaancaseeseses

Opinion of Supreme Court of Illinois in

Shell Oil Co., et al. v. Dept. of Revenue,

et al. (Docket No. 55910) (Decided March

25, 1983; reh. den. May 27, 1983) .........

Debates of the General Assembly con-

cerning Senate Bill 957 (enacted as IIli-

nois Public Act 82-598) ............sveseveees

Constitutional Provisions and Statutes ...

. 61

. 89

In THE

Supreme Court of the Gnited States

Octoser Term, 1982

FIRST NATIONAL BANK AND TRUST COMPANY OF

EVANSTON, as Trustee under a Trust

Agreement, dated March 17, 1975, and known as Trust R-1809,

Appellant,

Vv.

EDWARD J. ROSEWELL, County Treasurer and Ex-Officio

County Collector of Cook County, Illinois;

THOMAS C. HYNES, Assessor of Cook County, Illinois; and

HARRY H. SEMROW and SEYMOUR ZABAN, Commissioners

of the Board of (Tax) Appeals of Cook County, [llinois,

Appellees.

On Appeal From The Supreme Court Of Dlinois

APPENDIX TO JURISDICTIONAL STATEMENT

App. 1

APPENDIX 1

[November 18, 1982]

IN THE SUPREME COURT OF ILLINOIS

Docket No. 55931—Agenda 30—September 1982.

FIRST NATIONAL BANK AND TRUST COMPANY

OF EVANSTON, Trustee, Appellee, v. EDWARD J.

ROSEWELL, County Treasurer, et al., Appellants.

JUSTICE UNDERWOOD delivered the opinion of

the court:

Plaintiff, the First National Bank and Trust Company

of Evanston, as trustee, brought this action in the Cook

County circuit court against County Treasurer Edward

J. Rosewell seeking to enjoin the collection of 1978 real

estate taxes upon the trust property. Also joined as

defendants were the then members of the county board

of tax appeals, Harry H. Semrow and Seymour Zaban,

against whom a claim for damages under 42 U.S.C. sec-

tion 1983 (1976) was asserted. The circuit court dis-

missed the damage action but reduced the assessed

valuation of the real estate from $8 million to $3.9 mil-

lion. The appellate court affirmed (101 Ill. App. 3d

459), and we granted the defendants’ petition for leave

to appeal.

Plaintiff holds title to certain Evanston real property

in trust for American Plaza Associates (hereafter tax-

payer), a limited partnership having as its principal

asset the 18-story building on the trust property. In

mid-1978 when the building was new and still only par-

tially rented, the Cook County assessor notified the tax-

payer that the property's assessed value had increased

from the 1977 level of $2 million, which was established

when the building was under construction, to $8 million.

Because the assessment rate was 40%, this indicated

that the assessor regarded the building’s fair cash mar-

ket value as approximately $20 million. The taxpayer

App. 2

then sought to persuade the assessor to decrease the

assessment, arguing that the assessor usually used an

income-capitalization approach when valuing newly con-

structed buildings and that the taxpayer’s building did

not produce sufficient income to justify an $8 million

assessment. The assessor agreed to a reduction which

the taxpayer considered unsatisfactory; accordingly, it

submitted further information to the assessor in early

November. After reviewing the new financial data, the

assessor notified the taxpayer that a new assessed value

of $3.4 million had been calculated. The Evanston tax

rolls for 1978, however, had been certified to the board

of appeals before the assessor substituted the new fig-

ure. Once certified, the assessor can no longer change

assessments. See II]. Rev. Stat. 1977, ch. 120, par. 603.

Consequently, and pursuant to section 118 of the Rev-

enue Act of 1939 (Ill. Rev. Stat. 1977, ch. 120, par.

594(1)), the taxpayer then filed a complaint with the

board of appeals. The assessor thereafter submitted a

recommendation to the board suggesting that the assess-

ment be lowered to $3 million and that the property be

reassessed in 1979. The taxpayer’s petition to the board,

however, included information that the construction cost

of the building was approximately $17 million. Addi-

tionally, it is undisputed that the property had been

mortgaged for some $20 million, and that objections

were sustained to a May 1977 letter from a deceased

general partner to a major tenant referring to the lat-

ter’s $25 million offer for the property, and the mort-

gagee’s “intense interest” in purchasing at a $30-32

million figure. Although the board requested an audited

financial statement for calendar 1978, it was informed

that the taxpayer was audited on a fiscal-year basis,

and that an audited calendar-year statement was un-

available. The taxpayer did, however, submit a financial

report prepared by an accounting firm. Commissioner

Semrow testified that the board, upon considering the

conflicting evidence of value,, had determined that the

taxpayer’s evidence was insufficient to justify the con-

clusion that the certified assessment was incorrect; con-

sequently, the board declined to decrease the assessment.

App. 3

Instead of pursuing the payment-under-protest tax-ob-

jection remedy provided by the statute (Ill. Rev. Stat.

1977, ch. 120, ot 675) the taxpayer paid only $516,000,

representing that portion of the taxes it considered fair,

and filed its three-count equitable action. Count I alleged

that the board of appeal’s decision was constructively

fraudulent and constituted a denial of equal protection

under both the Federal and State constitutions. It sought

an injunction against the collection of any further taxes

for 1978. The taxpayer also alleged that it would have to

borrow the amount of any unpaid taxes and that requir-

ing it to pay interest on that sum, and to forgo interest

in the event that a refund was forthcoming, rendered

the legal remedy of payment under protest inadequate.

Count II alleged that the decision of commissioners

Semrow and Zaban had infringed upon the taxpayer's

equal protection rights in violation of 42 U.S.C. sections

1981 and 1983 (1976) and sought both an injunction

against any further collection and $100,000 in damages

from these two defendants. Count III sought a writ of

certiorari to the board of appeals, asserting that this

was the only way by which the taxpayer could obtain

judicial review.

Because we consider the tax-objection route to be an

adequate legal remedy in this case, it is unnecessary to

consider whether the board of appeal’s decision consti-

tuted constructive fraud which violated the taxpayer’s

constitutional rights. This court has consistently held

that independent grounds for equitable jurisdiction in

cases involving real estate taxes exist only when an

unauthorized tax is levied or when exempt property is

taxed, neither of which is true here. (See, eg., Hoyne

Savings & Loan Association v. Hare (1974), 60 Ill. 2d 84,

Clarendon Associates v. Korzen (1973), 56 Ill. 2d 101.) In

all other situations, equity will assume jurisdiction only

when no adequate legal remedy is available. Hoyne Sav-

ings & Loan Association v. Hare (1974), 60 Ill. 2d 84, La

Salle National Bank v. County of Cook (1974), 57 Ill. 2d

818; Clarendon Associates v. Korzen (1973), 56 Ill. 2d

101; White v. City of Ottawa (1925), 318 Ill. 463.

App. 4

The facts of this case are readily distinguishable from

the circumstances which led to the granting of equitable

relief in Hoyne Savings & Loan Association v. Hare

(1974), 60 Ill. 2d 84, upon which plaintiffs rely. Unlike

the unusual situation in Hoyne, where the 1971 and

1972 assessments were predicated upon nonexistent im-

provements, the increased assessment in this case fol-

lowed very substantial improvement in the property.

While the plaintiff in Hoyne was unaware of the 1971

increased assessment until after the tax rolls had

closed, the taxpayer in this case received notice of the

1978 increase long before the assessments were certi-

fied. Although equitable intervention was approved as

to the 1971 assessment in Hoyne, this court held that

equitable relief was inappropriate as to the 1972 assess-

ment because the plaintiff knew of the increase long

before the 1972 tax bills became due and simply “elected

not to pursue the remedy provided by statute.” (60 III.

2d 84, 91.) The same can be said of the taxpayer in this

case.

It is argued that the payment-under-protest tax-objec-

tion remedy provided by section 194 of the Revenue Act

of 1939 (Ill. Rev. Stat. 1977, ch. 120, par. 675) is inade-

quate because the taxpayer’s principal asset—the prop-

erty being taxed—did not generate sufficient income to

pay the taxes under protest. Alternately, the taxpayer

argues that it would have to borrow at high interest

rates the money with which to pay. This, without more,

is insufficient to render the legal remedy inadequate.

Illinois law imposes joint liability, even though limited

as to some, for the obligations of the partnership. (Ill.

Rev. Stat. 1977, ch. 106%, par. 15(b).) Nothing in the

record here indicates that they would be unable to

supply the necessary funds. Indeed, Joseph Beale, one of

the general partners, testified that one of the limited

partners had supplied most of the funds used to pay

part of the 1978 tax bill. Moreover, we agree with

defendants’ suggestion that, if adequacy of the tax-

objection remedy turned upon whether the property

App. 5

being taxed produced sufficient income to pay the pro-

tested tax, countless equitable actions might well be

brought by the owners of vacant lots and other low-

income properties to forestall the payment of their

taxes. Such circumstances serve only to promote insta-

bility in local government finances, since property taxes

are a principal source of revenue for local governments.

(See Advisory Commission on Intergovernmental Rela-

tions, Significant Features of Fiscal Federalism 538, 56,

78 (1980).) As we noted in Clarendon, the absence of a

requirement that tax objections be accompanied by pay-

ments under protest during the depression years resulted

in great numbers of people refusing to pay their taxes

and filing objections, thus severely impairing the func-

tioning of governmental units. Clarendon Associates v.

Korzen (19783), 56 Ill. 2d 101, 106.

Nor do we find persuasive the taxpayer’s argument

that failure to provide interest upon refunded tax pay-

ments renders the payment-under-protest remedy inade-

quate. Although the General Assembly has recently

amended the Revenue Act to provide for such interest

payments (see Pub. Act 82-598, “An Act to amend Sec-

tions 192(a) and 194 of the ‘Revenue Act of 1939’, filed

May 17, 1939, as amended”), that action does not indi-

cate that the remedy was previously inadequate. Indeed,

this court has specifically held that the lack of interest

on refunded payments did not render the remedy inade-

quate. (Clarendon Associates v. Korzen (1973), 56 Ill. 2d

101; Lakefront Realty Corp. v. Lorenz (1960), 19 Ill. 2d

415.) The Supreme Court agreed with that conclusion

when it recently over-turned a lower court injunction

restraining tax collection. Rosewell v. LaSalle National

— (1981), 450 U.S. 508, 67 L. Ed. 2d 464, 101 S. Ct.

Raised here for the first time is the taxpayer’s conten-

tion that the failure to provide interest on refunds con-

stitutes a taking in violation of the fifth amendment. In

support of this argument, the taxpayer cites the recent

decision in Webb's Fabulous Pharmacies, Inc. v. Beck-

App. 6

with (1980), 449 U.S. 155, 66 L. Ed. 2d 358, 101 S. Ct.

446, in which the Supreme Court found that a Florida

county clerk’s failure to refund interest earned on a sum

deposited with him pending resolution of an interpleader

action constituted an improper taking. Unlike this case,

however, Webb’s involved only private funds, and Flor-

ida law provided a separate statutory fee as compensa-

tion for the clerk’s services. Significantly, the Supreme

Court carefully limited its holding to those narrow cir-

cumstances and concluded by stating: “We express no

view as to the constitutionality of a statute that pre-

scribes a county’s retention of interest earned, where the

interest would be the only return to the county for servi-

ces it renders.” (449 U.S. 155, 165, 66 L. Ed. 2d 358,

367, 101 S. Ct. 446, 452.) In light of the absence of any

service charge in connection with the Revenue Act’s

remedy of payment under protest (Ill. Rev. Stat. 1977,

ch. 120, par. 675), we view the retention of accrued

interest as not constitutionally prohibited.

Because of our conclusion that the equitable action

was improperly allowed it is unnecessary to address the

merits of the taxpayer’s civil rights claim in count II,

which was brought in equity for the same reasons

alleged in count I. We find this court’s statement in La

Salle National Bank v. County of Cook (1974), 57 Ill. 2d

318, 324, particularly apposite: “The legal remedy by

way of payment under protest followed by objections to

the application for judgment for delinquent taxes pro-

vides an adequate remedy at law wherein the alleged

irregularities and violations of plaintiffs’ constitutional

rights may be litigated and, if warranted, relief granted.

This court has held that it is proper to raise constitu-

tional questions arising from alleged improper assess-

ments in this manner. People ex rel. Callahan v. Gulf,

Mobile and Ohio R.R. Co., 8 Ill. 2d 66, at 69; People ex

rel. Ross v. Chicago, Milwaukee, St. Paul and Pacific

R.R. Co., 381 Ill. 58, at 61.” In a similar section 1983

action, the Supreme Court found the equitable action

improper and cited this court, noting: “There is no

App. 7

doubt that the Illinois state-court refund procedure pro-

vides the taxpayer with a ‘full hearing and judicial

determination’ at which she may raise any and all con-

stitutional objections to the tax. LaSalle National Bank

v. County of Cook, 57 Ill. 2d 318, 324, 312 N.E. 2d 252,

255-256 (1974).” (Rosewell v. LaSalle National Bank

(1981), 450 U.S. 508, 514, 67 L. Ed. 2d 464, 474, 101 S.

Ct. 1221, 1229-30.) Accordingly, the taxpayer should

have pursued its section 1983 claim in a legal action

rather than in equity.

Similarly, this case does not present circumstances

appropriate for issuance of a writ of certiorari. It has

long been established in Illinois that a writ of certiorari

may not be had when another adequate remedy is avail-

able. (Jacobson v. Gunzburg (1894), 150 Ill. 135; Glennon

v. Burton (1898), 144 Ill. 551; Goodfriend v. Board of

Appeals (1973), 18 Ill. App. 38d 412; Barden v. Junior

College District No. 520 (1971), 132 Ill. App. 2d 1038,

cert. denied (1972), 406 U.S. 920, 32 L. Ed. 2d 120, 92 S.

Ct. 1777. See Kinsloe v. Pogue (1904), 213 Ill. 302. See

also 7 Ill. L. & Prac. Certiorari sec. 6 (1954).) In view of

the judicial review afforded the taxpayer in the tax-

objection remedy, issuance of the writ of certiorari was

erroneous.

For the reasons stated above, that portion of the ap-

pellate court’s decision affirming the trial court’s in-

junction is reversed. Its affirmance of the dismissal of

count II is affirmed. The cause is remanded to the cir-

cuit court of Cook County with directions to dismiss the

complaint.

Affirmed in part and reversed in part

and remanded, with directions.

App. 8

APPENDIX 2

APPELLATE COURT OF ILLINOIS

FIRST JUDICIAL DISTRICT

FOURTH DIVISION

October 22, 1981

80-1942

FIRST NATIONAL BANK AND TRUST COMPANY OF

EVANSTON, as Trustee under Trust Agreement dated

March 17, 1975, and known as Trust No. R-1809,

Plaintiff-Appellee, Cross-A ppellant,

vs.

EDWARD J. ROSEWELL, Treasurer of Cook County, II-

linois, and HARRY H. SEMROW and SEYMOUR ZABAN,

Commissioners of the Board of (Tax) Appeals of Cook

County, Illinois,

Defendants-A ppellants, Cross-A ppellees,

THOMAS C. HYNES, Assessor of Cook County, Illinois,

Defendant.

Appeal from the Circuit Court of Cook County.

Honorable EARL ARKISS, Presiding.

Mr. JUSTICE LINN delivered the opinion of the court:

Defendant, Edward Rosewell, in his position as County

Collector, appeals from an order entered in the circuit

court of Cook County permanently enjoining him from

App. 9

collecting approximately $700,000 in 1978 real estate tax-

es allegedly owed by plaintiff, First National Bank and

Trust Company of Evanston, the legal title holder of im-

proved business property in Evanston. Plaintiff cross-

appeals from a judgment entered in favor of defendants

Harry Semrow and Seymour Zaban, in their positions as

Commissioners of the Board of (Tax) Appeals, on a civil

rights claim for damages and injunctive relief brought

by plaintiff under 42 U.S.C. § 1983.

We affirm.

Facts

Plaintiff holds legal title to improved business prop-

erty in Evanston in a land trust for a limited partnership

known as American Plaza Associates (hereinafter the

partnership). In October 1977, the partnership completed

construction on the property of an eighteen story office

building. This office building was the sole income

producing asset of the partnership. Following the com-

pletion of the building, the partnership began the process

of renting space in the building. By the end of 1978,

the building was only partially occupied. In the middle

of 1978, the partnership received notice from defen-

dant Thomas Hynes, in his position as County Assessor,

that the assessed value of the property for 1978 had

been determined to be approximately $8 million. This

represented a fair cash value of the property of ap-

proximately $20 million since the applicable assessment

rate was 40 percent. The $8 million assessment was an in-

— of $6 million over the 1977 assessed value of $2

million.

After receiving the notice, the partnership filed a

complaint with the assessor seeking a decrease in the

1978 assessment to $3.1 million. In its complaint, the

partnership alleged that the building on the property had

cost $17 million to construct and even under a replace-

ment cost approach the $8 million assessment represent-

ing a $20 million fair cash value was excessive. The

partnership pointed out that the office building was only

App. 10

in its first year of operation, that it had only been partial-

ly rented, and that the estimated gross income the

partnership would receive from the property in 1978 was

approximately $3 million. The partnership requested

that the assessor take into consideration the problem of

renting the building in its first year, and requested that

the assessor use primarily an income capitalization ap-

proach to determine the fair cash value of the property.

This request was based on guidelines used by the assessor

and known to the partnership as being applicable to in-

come producing property. After taking certain deduc-

tions from gross income usually allowed by the assessor

for determining the figure to be capitalized, the

partnership contended that the fair cash value of the

property based on an income capitalization approach was

a little less than $8 million and the assessed value for

1978 should be $3.1 million.

After being supplied with necessary documentation,

the assessor’s employee in charge of handling the com-

plaint agreed with the partnership that the income

capitalization approach should be given primary con-

sideration, but disagree with some of the figures sup-

plied by the partnership. The employee determined that

the fair cash value for the property should be set at

approximately $8.5 million with an assessed value of $3.4

million. The employee, after receiving authorization, told

the partnership that he would change the assessor’s rolls

to show an assessed value for 1978 of $3.4 million. The

employee also told the partnership that this assessed

value would apply for 1978 only and the property would

be reassessed in 1979 when the income from the property

would probably be higher.

The assessor’s decision to lower the 1978 assessed value

to $3.4 million was made in early November 1978. After

the decision was made, it was discovered that the

assessor's rolls for 1978 for Evanston had already been

certified to the Board of Appeals. Once certified, assessed

values can only be changed by the Board of Appeals. The

assessor’s employee told the partnership what had oc-

curred and suggested that the partnership could pursue

App. ll

either of two statutory methods for getting the assess-

ment changed. The employee said that the assessor could

certify a mistake to the Board (see Revenue Act §§ 113(2),

122 (Ill. Rev. Stat. 1979, ch. 120, pars. 594(2), 603)), or the

partnership could file a complaint with the Board and

the assessor would file a recommendation that the assess-

ed value be changed to $3.4 million (see Revenue Act

§ 1131) (Ill. Rev. Stat. 1979, ch. 120, par. 594(1)).

The partnership chose the latter course and, in late

November 1978, it filed a complaint with the Board re-

questing a decrease in the assessment to $3.1 million. The

assessor filed a recommendation that the assessed value

be changed to $3.4 million. Thereafter, without explana-

tion, the Board of Appeals, consisting of Commissioners

Semrow and Zaban, dismissed the complaint and left the

assessed value at $8 million.

In 1979, when the 1978 real estate taxes became due,

the partnership paid approximately $600,000 in real es-

tate taxes, the amount it would have owed if the $3.4

million assessment recommended by the assessor had

been accepted by the Board. The partnership refused to

pay an additional $800,000 in taxes allegedly owed based

on the $8 million assessment. Instead, the partnership

(through plaintiff) brought the present three count action

in the circuit court of Cook County.

In Count I, the partnership sought a permanent injunc-

tion against defendant Rosewell to prevent him from

collecting the additional $800,000 in taxes and any

penalties or interest owed on the amount because of the

partnership’s failure to pay the taxes on time. The

partnership alleged that the $8 million assessment was

constructively fraudulent because it was almost two and

one-half times the assessment determined by the assessor

himself to be correct and because the Board of Appeals

had failed to apply any known standards to deter-

mine that the $8 million assessment was correct. The

partnership alleged that its remedy at law, to pay the

taxes under protest and then file its objections in court

when the Collector filed his application for judgment (see

App. 12

Revenue Act §§ 194, 235 (Ill. Rev. Stat. 1979, ch. 120,

pars. 675, 716)), was inadequate. The partnership pointed

out that it did not have the assets to pay the additional

taxes because the partnership’s sole source of income was

the office building and it did not have the cash on hand to

pay the additional taxes since its total net income from

the first year of operation was less than the amount of the

taxes. The partnership admitted that it could borrow the

amount necessary to pay the tax but contended it would

have to pay 13.5 percent per year in interest (the prime

rate at the time the complaint was filed). The partnership

alleged that, on the average, it takes two years for an im-

proper tax to be returned to a taxpayer, and thus it

would cost the partnership approximately $200,000 to

pursue its legal remedy since no interest is paid by the

collector on amounts refunded to taxpayers. The part-

nership asserted that it was unreasonable to require

it to pursue its legal remedy in the circumstances of this

case and injunctive relief should be granted.

In Count II, the partnership sought legal and equitable

relief under 42 U.S.C. § 1983. The partnership alleged

that the Board’s arbitrary determination to leave the

assessment at $8 million denied it equal protection of the

iaws under the Fourteenth Amendment to the United

States Constitution. The partnership sought damages of

$100,000 from Commissioners Semrow and Zaban for

depriving it of its constitutional right and sought an in-

junction against defendant Rosewell to prevent him from

collecting the additional taxes.

In Count III, the partnership requested that a writ of

certiorari be issued to the Board of Appeals, that the

proceedings in which the Board determined that the $8

million assessment was correct be quashed, and that an

injunction be issued to prevent Rosewell from collecting

the additional taxes.

The defendants answered the complaint denying all of

the essential allegations except that defendant Thomas

Hynes, in his position as County Assessor, admitted that

the $8 million assessment was incorrect and admitted

App. 13

that the assessor had recommended a $3.4 million assess-

ment. The assessor asserted, however, that upon further

review of the information it had on file (some of it

supplied by the partnership after the complaint was

filed), the assessor believed that the proper assessed value

of the property for 1978 should have been approximately

$4.3 million.

The case went to trial. During plaintiff’s case-in-chief

various documents and testimony were presented to show

that the partnership had a gross income of approximately

$3 million in 1978 and that, after expenses, it did not

have the cash on hand to pay the taxes. Plaintiff called

various witnesses, among whom were employees of the

assessor’s office who had worked on plaintiff's file. These

employees explained that the assessor uses three basic

methods to determine the fair cash value of property: the

market approach, the income capitalization approach

and the replacement cost approach. The employees ex-

plained that the assessor had established various stan-

dards to be followed in determining the fair cash value of

any particular piece of property and these standards

were made known to persons who complained to the

assessor about the assessed value of property.

It was brought out that all three methods of evaluation

would be considered by the assessor with the market

approach—an examination of recent sales of similar

property in the same general area—being the preferred

method. However, on office buildings, the market ap-

proach was admitted to be of little value because of a

usual lack of recent sales of similar structures. For office

buildings, the assessor looks primarily to the income

capitalization approach and the replacement cost ap-

proach.

One of the employees that handled the partnership's

file stated that with new office buildings, the assessor

would give particular consideration to the problem of

getting the building filled with tenants in the first year of

operation and that the income capitalization approach

would be given primary consideration, though all ap-

App. 14

proaches were considered. The employees testified that

after considering the partnership’s file, they determined

that the $3.4 million assessment was correct. One em-

ployee who had not seen the file until after it was up-

dated following the filing of the complaint said that he

would have recommended an assessed value of $4.3

million if all the information had been available in 1978.

None of the employees contended that the $8 million

assessment was correct.

Plaintiff called defendant Semrow under section 60 of

the Civil Practice Act (Ill. Rev. Stat. 1979, ch. 110, par.

60). Semrow stated that he had been on the Board of

Appeals for 10 years. The bulk of plaintiff’s examination

of Semrow consisted of an attempt to determine why the

Board had dismissed plaintiff's complaint and left the

assessed value at $8 million. He said the Board dismissed

the complaint because it had not been provided sufficient

evidence to reach a reasonable conclusion. He said he had

been confused because he did not understand how a piece

of property with a newly constructed $17 million office

building on it could have a fair cash value of only $8

million. He said that he believed that plaintiff had failed

to meet its burden of proof to show that the $8 million

assessment was incorrect. When asked what plaintiff had

to prove beyond showing that the assessor himself believ-

ed the proper assessment should be $3.4 million, Semrow

failed to give any explanation. When asked what stan-

dards the Board applies in determining a proper assess-

ment, Semrow answered it depended on the facts of the

case. When asked whether Semrow, as a member of the

Board, used the same standards as the assessor to deter-

mine value, Semrow answered that he did not know what

the assessor did, that the Board was totally autonomous

and used its own standards. When again asked what

those standards were, Semrow repeated that it depended

on the facts of the case. When asked whether Semrow, as

a member of the Board, had used a replacement cost ap-

proach or an income capitalization approach, Semrow

answered, at one point, that he considered a replacement

cost approach, but, at another point, he said, “I didn’t es-

App. 15

tablish a cost approach, I didn’t establish an income ap-

proach, I based my whole judgment on the way I

answered * * * before.”

At one point in the examination, Semrow claimed that

he may have dismissed the pa 0g because, though the

income statements supplied to him were verified, he had

requested an audited statement and the partnership had

failed to provide one. (The partnership had informed him

that it would try to get one, but the complaint was dis-

missed before one was supplied.) However, when Semrow

was asked why the audited statement was considered im-

portant, he replied that he did not remember.

Plaintiff also showed that the assessor had determined

that the 1979 assessed value of plaintiff's property would

be approximately $6 million.

At the conclusion of plaintiff's case-in-chief, the trial

court granted a motion for judgment in favor of the

defendants on Count II of the complaint, the civil rights

claim, but denied the motion as to the other counts.

Defendants presented evidence to show that the proper-

ty was subject to an outstanding mortgage of $20 million.

Defendant also submitted into evidence a partnership

letter written in 1978 which mentioned that a third par-

ty, who did not testify, had made a tentative offer to

purchase the property with the building for $25 million.

The court allowed this letter to be admitted as proof that

an offer was made but refused to allow it as evidence to

prove that the property had a market value of $25

million. No evidence was presented to show that the

Board had considered the mortgage or the offer when it

determined that the $8 million assessment was correct.

No one ever testified to the belief that the $8 million

assessment was correct, including Semrow, who simply

said that he did not believe plaintiff had presented suf-

ficient evidence to show it was incorrect.

In final argument, defendants’ attorney, after contend-

ing that plaintiff had failed to show that the remedy at

law was inadequate or that the $8 million assessment was

constructively fraudulent, went on to argue what he

App. 16

believed to be the proper assessment of the property for

1978. He presented a chart with the partnership's income

figures for 1978. Based on these figures, the attorn

argued that the 1978 assessed value of the property

should be set by the court to be $3.9 million based on an

income capitalization method.

In its final order, the trial court found that the $8

million assessment was constructively fraudulent, that

plaintiff had no adequate remedy at law, and that a per-

manent injunction should be issued. Nevertheless, the

court found that the proper assessment for 1978 should

have been $3.9 million, the amount suggested by defen-

dants’ attorney. Based on this finding, the court ordered

plaintiff to pay any additional tax owed based on the $3.9

million figure. The court also granted plaintiff's request

for a writ of certiorari to the Board and quashed the

proceedings had before the Board in which it affirmed

the $8 million assessment.

Defendants Rosewell, Semrow, and Zaban appealed.

Rosewell has challenged the court’s issuance of an injunc-

tion, and Semrow and Zaban have challenged the court’s

issuance of a writ of certiorari. Defendant Hynes has not

appealed. Plaintiff cross-appealed and has challenged the

court’s order granting defendants’ motion for judgment

on the civil rights claim brought under 42 U.S.C. § 1983.

OPINION

I

Defendants’ Appeal

Injunctions to prevent the collection of real estate taxes

are generally allowed in only three situations: (1) when

the property is exempt from taxes; (2) when the tax is un-

authorized by law or void; (3) when the tax, or the assess-

ment upon which the tax is based, is fraudulent or con-

structively fraudulent and the remedy at law is inade-

quate. (Clarendon Associates v. Korzen (1973), 56 Ill. 2d

101, 306 N.E.2d 299.) It is the third situation which is

alleged to be applicable to this case. Defendants assert

that plaintiff failed to show that the remedy at law was

App. 17

inadequate or that the $8 million assessment was con-

structively fraudulent. We hold that in the circumstances

of this case the injunction to prevent the collection of the

additional taxes was properly granted.

Constructive Fraud

Defendants argue that plaintiff failed to show that the

$8 million assessment was constructively fraudulent.

They assert that based on a replacement cost approach

for determining fair cash value, the property could have

been deemed to be worth $20 million in 1978. They also

argue that the letter mentioning the 1978 offer to

purchase the property for $25 million should have been

admitted as evidence tending to show the fair cash value

of the property under the market approach. Based on

this, defendants claim that the property could have been

deemed to be worth $20 million in 1978 under the market

approach. Since either of the above approaches would

give an assessed value of the property in 1978 of 18

million, defendants contend that plaintiff failed to show

the $8 million assessment was excessive at all and thus

failed to meet its burden to prove the assessment was con-

structively fraudulent.

Even assuming that the letter should have been ad-

mitted as evidence of value, defendants’ argument is still

unacceptable. The question here is not what standards

should have been used to determine value, but whether

the Board of Appeals used any standards. When plaintiff

went before the Board of Appeals, it had the burden of

proving the $8 million assessment was improper. Once

the assessor, the official whose duty it is to determine

assessed values, admitted to the Board that the $8 million

assessment was incorrect and a $3.4 million assessment

was correct, plaintiff had undoubtedly met its burden.

Contrary to Commissioner Semrow’s belief at trial, the

Board could not ignore the assessor’s recommendation en-

tirely. The Board is not an autonomous body that can set

its own standards for determining assessed values. Under

the law, the assessor and the Board are required to act

App. 18

jointly in establishing standards for determining assessed

values. (Ill. Rev. Stat. 1979, ch. 120, par. 494.) Apparent-

ly, in Cook County, only the assessor has made public the

standards used for determining assessed values. (See

Ganz & Laswell, Review of Real Estate Assessments—

Cook County (Chicago) v.,Remainder of Illinois, 11 J.

Mar. J. of Prac. & Proc. 16 (1977).) However, it must be

assumed that these standards were adopted in accor-

dance with the law, meaning that the assessor and the

Board concurred in their adoption. Hence, the Board was

bound to apply the same general standards used by the

assessor.

The Board, perhaps, could have determined that the

assessor should not have relied primarily on the income

capitalization approach under the facts of the particular

case, but the Board had to use known and existing stan-

dards before it could reject the assessor’s recommenda-

tion outright. In the present case, it is obvious from Com-

missioner Semrow’s testimony that the $8 million assess-

ment was arbitrarily affirmed. The only understandable

reason given by Semrow for affirming the assessment was

that he was confused, and we believe that if a taxpayer is

about to be placed in a position of owing a million dollars

in real estate taxes, there should be more justification

than the simple fact that a public official was confused.

It is peculiar in this case that no one at trial ever

testified to the belief that the $8 million assessment was

correct. Commissioner Semrow merely stated that he

believed plaintiff had failed to meet its burden in proving

the $8 million assessment was improper. By the conclu-

sion of the trial, even the defendants’ attorney was argu-

ing for a $3.9 million assessment. This argument was ac-

tually adopted by the trial court.

From all of the facts in this case, it is clear that plain-

‘tiff met its burden of proving the $8 million assessment

for 1978 was excessive and constructively fraudulent.

The assessor admitted, from the beginning, that it was

excessive. The assessor admitted that under the appli-

cable standards the proper assessment was between

$3.4 and $4.3 million. The Board of Appeals had no

App. 19

known reason for affirming the $8 million assessment.

The 1979 assessment has been set at only $6 million. The

defendants’ attorney argued that a $3.9 million assess-

ment was proper. Obviously, the trial court was correct

in finding the $8 million assessment constructively

fraudulent. Cf. People ex rel. Nordlund v. Lans (1964), 31

Ill. 2d 477, 202 N.E.2d 543.

Adequate Remedy at Law

Defendants argue that plaintiff failed to show the

remedy at law was inadequate. Citing Clarendon As-

sociates v. Korzen (1973), 56 Ill. 2d 101, 306 N.E.2d

299, defendants contend that plaintiff, to prove the inade-

quacy of the remedy at law, had to show the remedy at

law was “unavailable.” Defendants contend that to do this

plaintiff had to show that it was impossible for it to pay

the taxes under protest and challenge the collector’s

application for judgment in court. Defendants argue that

since the partnership admitted it could borrow the money

to pay the taxes, the “unavailability” of the remedy at law

was not shown. Defendants, in the alternative, contend,

that even if the partnership need not have shown that it

was unable to borrow the money to pay the taxes, the

partnership should have been required to show that all of

the partners, from their personal assets, could not have

paid the taxes, and not just merely that their partnership

entity did not have the funds to pay the taxes.

Though Clarendon Associates v. Korzen contains

language to the effect that an injunction against the

collection of taxes should be denied unless the taxpayer

shows the remedy at law is unavailable, the language of

that opinion was tempered somewhat in the subsequent

opinion of Hoyne Savings & Loan Assoc. v. Hare (1974),

60 Ill. 2d 84, 322 N.E.2d 833. There, the supreme court

held that even when a taxpayer can pay the taxes, rare

cases may present themselves where it would be extreme-

ly unjust to deny an injunction and require a taxpayer to

pay the taxes under protest and forego the interest on his

payment. We believe the present facts present such a

case.

App. 20

Stripped to the basics, this case presents the following

scenario. Defendants contend that plaintiff should be

denied an injunction and be required to lose over $200,-

000 in interest by pursuing its legal remedy of paying the

taxes under protest and then challenging the collector’s

application for judgment in court. Defendants make this

contention though the assessor himself has always ad-

mitted that the $8 million assessment was excessive and

that the taxpayer should pay taxed based on an assess-

ment of $3.4 million to $4.3 million. Defendants make

this contention despite their own argument that a $3.9

million assessment was proper and that the taxpayer

should pay a tax based on that assessment. In essence,

defendants contend that plaintiff should be required to

lose over $200,000 in interest to pursue its legal remedy

not because there is any possibility that plaintiff owes an

additional tax based on the $8 million assessment, but

merely because a member of the Board of Appeals was

confused. Clearly, it would be extremely unjust to require

plaintiff to pursue its legal remedy in this case.

Therefore, even assuming that the partnership could

have paid the taxes, we would still hold that the injunc-

tion was properly issued in this case.

II

Defendants also contend that the trial court erred in

granting the writ of certiorari and quashing the

proceedings had before the Board when it affirmed the

$8 million assessment. In light of our decision on the con-

structive fraud count, we find we need not address this

issue. The primary relief sought by plaintiff under Count

I of its complaint, the constructive fraud count, and

Count III, the writ of certiorari count, was the issuance of

an injunction to prevent the collection of the additional

taxes. Since we have found that the injunctive relief was

properly granted under the constructive fraud count, it

would be superfluous to consider whether the same relief

should have been granted under the writ of certiorari

count. Accordingly, we simply affirm the trial court’s

findings under Count III without expressing any opinion

as to whether a writ of certiorari was properly granted.

App. 21

III

Plaintiff's Cross-appeal

Plaintiff has cross-appealed from the judgment entered

for defendants at the conclusion of plaintiff's evidence on

the civil rights claim brought under 42 U.S.C. § 1983. In

that claim plaintiff accused Commissioners Semrow and

Zaban of violating plaintiff’s right of equal protection of

the laws (U.S. Const., amend. XIV) by affirming the $8

million assessment without applying any known stan-

dards of valuation. Plaintiff sought damages of $100,000

from Semrow and Zaban and an injunction against

Rosewell to prevent him from collecting the additional

taxes based on the $8 million assessment.

In entering judgment for defendants, the trial court

found, after weighing the evidence, that plaintiff had

failed to present a prima facie case against defendants.

We note that plaintiff only claimed a violation of equal

protection of the laws and not a violation of due process.

From the evidence at trial plaintiff presented an argu-

able case for violation of due process in that Semrow

failed to apply any standards in affirming the $8 million

assessment but there was little evidence from which a

violation of equal protection could be inferred. We also

note that no direct evidence was presented against Com-

missioner Zaban and the only evidence on damages was

the damage plaintiff would suffer if it was forced to

pay the additional taxes. At oral argument, plaintiff in-

dicated that the civil rights claim was asserted primarily

as another basis for obtaining the injunction and did not

indicate any desire to amend its complaint or pursue the

claim any further if the injunction were affirmed under

the constructive fraud count. Hence, for all of these

reasons, we affirm the judgment entered for defendants

on the civil rights claim.

Accordingly, for the reasons noted, we affirm.

Affirmed.

Johnson and Jiganti, JJ., concur.

App. 22

APPENDIX 3

State of Illinois [April 22, 1980]

County of Cook

IN THE CIRCUIT COURT OF COOK COUNTY

LAW DIVISION—TAX DEPARTMENT

FIRST NATIONAL BANK & TRUST COMPANY OF EVANSTON,

as Trustee under Trust Agreement dated March 17,

1975, and known as Trust No. R-1809,

Plaintiff,

79 CH 6357 vs.

EDWARD ROSEWELL, Treasurer of Cook, THOMAS HYNES,

Assessor of Cook County; and HARRY SEMROW and

SEYMOUR ZABAN, Commissioners of the Board of

Appeals of Cook County,

Defendants.

MEMORANDUM OF DECISION

JAMES A. ROONEY,

Attorney for Plaintiff

MICHAEL BACCASH,

Asst. State’s Attorney,

Attorney for Defendants

INTRODUCTION

The improved realty is located in Evanston. The

building is a highrise of 18 stories with a garage for 380

parking stalls. Construction was commenced in 1976 and

occupancy availability was around the first of October,

App. 23

1977. The rentable areas of the building is composed as

follows:

Office Space— 268,888 square feet,

Commercial— 39,891 square feet,

Storage— 9,470 square feet.

For the year 1977, the Assessor assessed the property

at $2,006,222. For the year 1978 the taxpayer was notified

that the assessment would be $8,008,354. A complaint ac-

companied by data was submitted to the Assessor’s office

to protest the assessment. However, during the submis-

sion time of the complaint and data, the assessment

period for Evanston Township was closed. As a conse-

quence, the 8 million dollar assessment was certified.

(The taxpayer alleges that it was informed by the

Assessor’s office that the assessment was the result of

computer error.)

On the data submitted to the Assessor, the Assessor

concluded that the proper assessment should be $3,406,-

863 instead of the 8 million dollars. The taxpayer was

given the option by the Assessor to determine whether it

wanted a certificate of error to be filed with the Board of

Appeals or in the alternative a recommendation to be

made as to the assessment. The taxpayer then filed its

complaint with the Board of Appeals which included the

Assessor’s recommendation. However, the Board rejected

the $3,406,363 recommendation and kept the assessment

at 8 million.

The taxpayer in its first amended complaint alleges

that the real estate taxes on the erroneous 8 million dollar

assessment is $1,394,984.24. This is to be compared with

the tax liability of $587,489.36 on the proper assessment

of $3,406,363. The difference in tax liability between the

two assessments is $807,494.88.

The taxpayer then alleges that “to contest the excess

taxes of $807,494,.88 it will be forced to borrow money at

existing interest rates since it has no funds sufficient to

pay the fraudulent taxes, wait two years for a refund and

receive said refund without interest.” The taxpayer

further alleges (at the time the complaint was drafted)

App. 24

the prime interest rate charged by most banks was 13.25

percent. Interest on the disputed amount at prime for two

years would cost plaintiff $213,986.14.

(This court notes that at this time, the prime rate

generally is 20.00 percent and the current inflation is 18

percent.)

After the “mechanical-error” or mistake was deter-

mined and acknowledged by the Assessor, the taxpayer

initially had available three statutory recourses con-

ditioned by a time factor:

(1) Pursuant to Section 598 of Chapter 120 of II-

linois Revised Statutes, the taxpayer file a complaint

with the Board of Appeals. The Board in turn

forwards a copy to the Assessor.

(2) Section 603 authorizes a certificate of correction

to be executed by the Assessor “at any time prior to

the time the Board of Appeals is required to com-

plete its work under the provisions of Section 606.”

The certificate of correction is predicated upon a

mistake or error other than a mistake of error of

judgment. If the Board of Appeals is satisfied that a

mistake or error has occurred both Commissioners

shall endorse the certificate and order the Assessor

to correct the mistake or error.

(3) Section 604 provides that if the County Assessor

shall discover an error or mistake in such assess-

ment, such Assessor shall execute a certificate at

anytime before judgment and after the Board of

Appeals completes its work and the assessment

books are certified. The certificate of error when

properly endorsed may be received into evidence.

The necessity for the filing of a complaint however is a

requisite for the exhaustion of administrative channels.

In re Application of County Treasurer of Cook County v.

rhe abe Alley Corporation, 35 Ill. App.3d 449, the court

said,

“There is no inherent inconsistency between the

Assessor filing a certificate of correction and the

App. 25

taxpayer filing a complaint. The portions of the

Revenue Act from which the Board of Appeals

derives its powers and from which taxpayers and the

Assessors derive their statutory rights to file valua-

tion complaints and certificates of correction do not

make them mutually exclusive procedures. A tax-

payer’s valuation complaint is designed to protect a

property owner from excessive and unjust assess-

ments while a certificate of correction is a pro-

cedure permitting the Assessor to petition for the

correction of his own non-judgmental errors to the

end that the assessment process might be more ef-

ficient and just.”

Finally, the statutory remedy afforded the taxpayer

are the provisions of Section 675 (Section 194 of the Act).

In Chicago Sheraton Corporation v. Zaban, 71 IIl.2d 85,

90 the court said,

“Under the provisions of Section 194, if the taxpayer

is not satisfied with the order of the Board of

Appeals, he may pay the tax under protest (Chap.

120, par. 675) and object to the Collector’s applica-

tion for judgment and order of sale, thus obtaining

judicial review of the assessment and tax. An ex-

amination of the statutory scheme shows that the

certificate of error procedure provided in Section

123 is intended to be separate and distinct from the

procedure available to a taxpayer under Sections

117 and 118 [194] (filing of complaints and cer-

tificates of correction).

The recourse that the taxpayer by this litigation seeks

to invoke is that the circumstances of this case create a

special ground for equitable jurisdiction under the

criteria established by Clarendon Associates v. Korzen, 56

Il].2d 101 (1973), but tempered by Hoyne Savings & Loan

Association.

The taxpayer’s amended complaint posited three issues

before the court predicated upon three distinct claims,

App. 26

In COUNT I:

The taxpayer alleges a deprivation of constitutional

rights:

A—A violation of the equal protection clause of

federal and state constitutions which resulted in “a

substantially excessive and constructively fraudu-

lent overassessment of the plaintiff's: property.”

B—A violation of the due process provisions of the

federal and state constitutions, “if it is forced to

follow the inadequate state court remedy for con-

testing the assessment and taxes in that the taxes

must be paid in full, a successful claimant must

typically wait two years for a refund, and no refunds

may be made with interest to a successful claimant.”

The taxpayer seeks an injunction.

IN COUNT II:

The allegations are made that the taxpayer’s civil

rights were violated in that the actions of Com-

missioners Semrow and Zaban constituted a depri-

vation of rights, privileges and immunities. The

cause of action is premised upon Section 1983,

Title 42 of the United States Code.

The taxpayer seeks an injunction and damages in the

sum of $100,000.

IN COUNT III:

The taxpayer seeks to bring forth the record of the

Board of Appeals by a Writ of Certiorari and quash

the proceeding of the Board.

The injunctive claims sought in Counts I and II along

with the money damages is governed by separate and dis-

tinct rules from that which govern the request for the

Writ of Certiorari.

App. 27

The money damages and the injunctive relief of Counts

I and II are governed by the rules that generally deter-

mine the admissibility of evidence and the grant of in-

junctive relief and damages.

Whereas, the Writ of Certiorari on its return to this

court brings to this court all relevant records. This court

must then determine with regard to the Board’s decision

whether the Board had jurisdiction and had acted in ac-

cordance with the law. This consists of only an inspection

of the record of the Board’s proceeding. The court cannot

review questions of fact or decide them. There can be no

extrinsic evidence.

TAXPAYER'S ARGUMENT

The taxpayer in its argument has anchored its

premises upon the constitutional guarantees of a violation

of equal protection and a denial of due process, in that:

1—That the Assessor and the Board failed to follow

established policies and procedures in making the

1978 assessment of plaintiffs which resulted in a con-

structively fraudulent overassessment.

2—That the law remedy provided for contesting the

assessment and taxes with its attendant requirement

that the taxes must be paid in full with a typical two

year wait for a refund with interest is a denial of due

process of both the Federal and State constitutions.

Pivotal to its contention is its reliance upon La Salle

National Bank v. Rosewell et al., 604 F.2d 530 (1979)

which is currently upon appeal to the United States

Supreme Court. La Salle National Bank brought a civil

—_ injunction under 42 U.S.C. Sec. 1983 to enjoin the

collection of excessive real estate taxes allegedly imposed

in violation of the plaintiff's due process and equal

protection under the Fourteenth Amendment.

The issue in the La Salle Bank case was posited as

follows:

“The question we must answer is whether this

remedy (state legal remedy) which requires prepay-

App. 28

ment of the entire tax bill and refunds erroneously

collected monies without interest (and allegedly with

an average delay of two years) is plain, speedy and

efficient.”

The U. S. Court of Appeals concluded that the Illinois

remedy is inadequate because,

1—Failure to pay interest on the refund,

2—Policy considerations and

38—Common sense.

The court then concluded that,

“The most succinct analysis of the inadequacy of a

tax grievance procedure which requires prepayment

of the entire tax and then refuses to pay interest on

the funds awarded successful litigants was provided

by Learned Hand over fifty years ago.”

‘It seems to me plain that it is not an adequate

remedy, after taking away a man’s money as a condi-

tion of allowing him to contest his tax, merely to

hand it back, when, no matter how long after, he es-

tablishes that he ought never to have been required

to pay at all. Whatever has bees our Archaic notions

about interest, in modern /'#&ncial communities a

dollar today is worth more than a dollar next year,

and to ignore the interval as immaterial is to con-

tradict well settled beliefs about value. The present

use of my money is itself a thing of value, and, if I

get no compensation for its loss, my remedy does not

altogether right my wrong’.

(Proctor & Gamble v. Sherman, 2 F.2d 165).

ISSUES

Issues which were posited in Clarendon Associates v.

Korzen, 56 Ill.2d 101 (1973), and in Hoyne Savings &

Loan v. Hare, ...... Ill.2d 84, have materiality to the cir-

cumstances of this litigation. In addition, the taxpayer

has raised the issue of constitutional guarantees,

therefore, the issues may be stated as follows:

App. 29

1—Does the facts of this case create a special ground

for equitable jurisdiction—namely a constructive

fraudulent excessive assessment.

2—Whether there is adequate remedy at law es-

tablished by Chapter 120, Sections 675 and 716

which is available to this taxpayer, which requires a

refund without interest upon a successful prosecu-

tion.

3—Were the taxpayer’s constitutional guarantees

violated?

4—Will the writ of certiorari lie?

These issues in turn raise the overall question as

whether “under these circumstances the court should in-

terfere with the tax assessment and collection by grant-

ing injunctive relief.”

COURT’S COMMENTS

In Lakefront Realty v. Lorenz, 19 Ill.2d 425, our

Supreme Court examined and weighed the rationale with

reference to the question of interest payments on refunds.

It was aware that in the year 1960, there was a division of

opinion among the authorities. It said,

“Authorities elsewhere are in extreme conflict and

are difficult to reconcile. Many courts have held that

where the taxpayer is entitled to a refund on an ex-

cess payment of taxes, he is likewise entitled to in-

terest on the refund as a matter of course, provided

no statute or public policy mitigates against it.”

The court rejected this position and then stated the

basis for its conviction that interest cannot be paid.

“The latter view (no interest) has its antecedents in

the rule that interest, being a creature of statute, is

recoverable only by statute, or contract, and in the

practical aspects of the circumstances that a tax

collector, being a mere trustee of public funds

collected for specific purposes, has no money to pay

interest in the absence of statutory authority to es-

tablish a fund for that purpose.”

App. 30

“We are of the opinion the latter view is the only

view compatible with the statutory system which

provides for the appropriation, levy, collection and

the disbursement of taxes in this State, and we think

too, as other courts have pointed out that the silence

of our refund statute on the question of interest dis-

closes a legislative intention to deny it. Accordingly,

we conclude that the plaintiff is not entitled to in-

terest in the absence of a statute imposing that

liability. This being so, the failure of the statutory

remedy to provide for the recovery of interest is no

measure of its adequacy or inadequacy.”

The trial court is especially mindful of the Supreme

Court’s comments in Clarendon when it said,

“This court has held in Lakefront Realty Corp. v.

Lorenz, 19 Ill.2d 415, that under the statutory

remedy provided by Sections 194 and 235 of the

Revenue Act of 1939 (Ill. Rev. Stat. 1971, chapter

120 paragraphs 675 and 716) the taxpayer is not en-

titled to interest on the refund. This court also held

in Lakefront that this fact does not render the

remedy at law inadequate so as to justify equity in

assuming jurisdiction. We see no reason to depart

from that decision.

If a failure to provide for the payment on a tax re-

fund were to render the statutory remedy inade-

quate, then the remedy would be inadequate as to all

objections to taxes whether these objections were

based on constructively fraudulent assessments, ex-

cessive rate, appropriation for multiple purposes or

any other of the money grounds for filing objections

to taxes.”

In re Application of County Treasurer, 42 Ill. App.3d

895 (1976), the court reaffirmed the requirement that a

taxpayer shall first pay all of the tax installments due in

order to object. Chapter 120 Sections 675 and 716, the

ety said are mandatory and not directory. The court

said,

App. 31

“The Supreme Court of Illinois has repeatedly stated

that the prepayment requirements of these sections

is mandatory.”

The Appellate Court then commented that,

“The only exception to the prepayment requirement

of Section 235 (Chapter 120 Section 675) is where the

objection is that the real estate assessed is not sub-

ject to taxation.”

The court further stated, “that the objector further con-

tends that requiring it to pay all of the installments due

before the filing of the objection violates constitutional

rights because it deprives the objector of the use of the

amount of money representing illegal tax. This argument

is not persuasive because it is a common, sanctional prac-

tice to require prepayment before contesting a tax. In

Lakefront Realty Corp. v. Lorenz (1960) 19 I1l.2d 415, the

court rejected a claim that the prepayment provisions re-

quires a taxpayer to purchase justice in contravention of

Section 19 of Article II of the Illinois Constitution of 1870

(now Section 12 Article 1).

“Every person shall find a certain remedy, * * * He

shall obtain justice by law, truly, completely and

promptly.”

Pointing out * * * ‘the common practice of the land

with respect to many taxes such as income taxes,

with-holding tax and the like, serve greatly to refute

the plaintiff's position.’

“While the court then was not addressing itself to the due

process question, its reasoning is persuasive that man-

datory prepayment requirement of Section 194, and 235

of the Revenue Act as amended, did not deprive _—

of its constitutional right to due process of law

ASSESSMENT OF PROPERTY

In Consolidated Coal v. Property Tax Appeal Board, 29

Ill. App.38d 465, 468, 470, the court said,

“There are also well established rules for the

challenge of property valuations for tax purposes. In

App. 32

Illinois, for purposes of Property Tax, both real and

personal property are to be assessed according to

fair cash value (Ill. Rev. Stat. 1969, Chapter 120 Sec-

tions 501, 502). This is generally interpreted to mean

fair market value or the price that property would

bring at a sale where both parties are willing, ready

and able to do business and under no duress to do

so.”

“Market values generally are the standard to be used

in valuing property for tax purposes. It is true that

there are instances where no market value can be

determined, or where a market value is not truly

reflective of an item’s worth. In such situations,

valuation methods such as reproduction cost, less

depreciation and capitalization of income are help-

ful. They are not however solely determinative of

valuation.”

“Elements such as depreciation, obsolescence and

lack of market ability are properly considered in

valuing property. The age of property, its life expec-

tancy, its income production capabilities, its condi-

tion and location are all factors in valuation.”

The record in this case is silent to any evidence as to

market values.

The role and function of the Assessor and the Board is

delineated by statute. The court decisions to some extent

have succinctly summarized their status.

ASSESSOR:

The role of the Assessor in assessing realty is indeed

singular. From earliest times the power of valuation of

property rested exclusively with him. (Chicago & Alton

Railroad Co. v. People, 98 Ill. 350).

There is a presumption that the determination of the

Assessor as to valuation is correct because his actions

were executed pursuant to the mandate of his office.

Hence, this determination whether modified by cer-

tificate of correction or error constitutes a prima facie

case as to valuation.

App. 33

The court in People v. Millar, 307 Ill. at 562, said,

“The assessment of property is purely statutory and

in fulfilling that mandate, he is obliged to take into

consideration any information he has acquired from

his investigations as well as property comparisons.

His charge is to form a honest judgment as to the

value to be fixed. The presumption is that the tax is

just and that the officers levying it have discharged

their duty. This presumption can be overcome only

by clear and explicit testimony.”

The court in Goodfriend v. Board of Appeals, 18 Ill.

App.3d 412, said,

“The assessment of property for taxation must be

made by the County Assessor or his deputy. In fact,

by statute the Assessor takes an oath that this will be

done. He, exclusively is vested with power to make

assessments. This power imposes on the Assessor the

duty that is correlative to a right which inheres in

every person in the county: The right to be informed

of the value placed on his property by the County

Assessor in order that he who is aggrieved may

appeal to the Board.” (Citations omitted and

emphasis supplied)

BOARD:

In Goodfriend, the court said,

“Under the Revenue Act, * * * * the Board of

Appeals had the power only to hear and * * * * cor-

rect any mistake or error (other than mistakes or

errors of judgment as to valuation of any real or per-

sonal property).

+ + * *®

“Within the scope of its administrative powers, the

Board is an inferior tribunal. It has only the jurisdic-

tion given to it by statute. It cannot make an assess-

ment; it can only review assessments made by the

County Assessor.”

App. 34

In their noteworthy article, Ganz and Laswell, Review

of Real Estate Assessments—Cook County v. Remainder

of Illinois, John Marshall Journal of Practice &

Procedure, Volume 11, Fall 1977, Number 1, stated at

Page 28,

“During the course of its review, the Board of

Appeals must adhere to the same percentage levels

of market value as the Assessor. However, while

both the Assessor and the Board of Appeals are re-

quired to make and prescribe rules and regulations

for the assessment of property, only the Assessor has

done so. It is noteworthy that the only rules per-

taining to the Board of Appeals are those previously

quoted and even these were not jointly proclaimed

with the Assessor. The end result of this conspicuous

absence of governing rules in a Board of Appeals

proceeding is that the taxpayer’s burden of proof is

unknown.” (Emphasis supplied)

*_ * *&* *&

“On what then should the Board of Appeals base its

decision? Should it give presumptive weight to the

Assessor’s decision? Should it consider only the

evidence presented by the taxpayer? Should it con-

sider its own experience and possibly ex-parte con-

tacts.”

*_ *+ *& *& ©

“As has been stated the Board of Appeals has been

referred to as being quasi-judicial or judicial in na-

ture. Does this statute require the Board in conduct-

ing a hearing to comply with judicial standards?”

“The precise standards to which the conduct of the

Board of Appeals must comport and remain un-

known because neither the courts nor the legislature

have provided any guidance as to this subject.”

App. 35

The guidance to proposed standards is the logical

deduction to be made from the comments made by the

court in Goodfriend, wherein it said,

“This law calls attention to the fact that by the

provisions in the Revenue Act of 1939, the leg-

islature has vested Appellants Board of Appeals,

Keane and Semrow (its members) with the power to

decide property rights of others, a power which exer-

cised makes their official actions judicial. However,

when considered in relation to the Circuit Court, the

Board of Appeals is an inferior tribunal.”

Where property rights of a taxpayer is involved in a

tribunal albeit, an inferior tribunal, the standards to be

applied are judicial which in turn are predicated on the

doctrine of due process. In this case, the positions of the

Assessor and that of the Board of Appeals are

characterized by immiscibility.

LITIGATION AT BAR

In the case at Bar—the alleged error that was

committed—be it computer or otherwise—would result in

an excessive, improper assessment which would be con-

structively fraudulent to the taxpayer. The Assessor is

supportive of the taxpayer. They are both in agreement

that the 8 million dollar assessment is improper. That

the evidence predicated upon the application of the

capitalization standard is corroborative of their premise

that the assessment was improper. The parties go their

separate ways as to whether the proper assessment is $3,-

406,363 or $4,376,659—a difference of $970,296.

building. Their expense factor would be larger than nor-

mal and the revenues would be down. He testified that

the normal procedure is to look at the three approaches to

value “and when we come up with a recommendation, we

App. 36

look at all three and decide what’s a reasonable assess-

ment.” (TR 43, 46)

He further testified that,

“Under these circumstances, the income approach

would have been more relevant because of the

problems with it renting up. So we would look at the

income.”

The formula employed was based upon the following

factors: The 40% assessment category (.40% x 8,515,907 =

$3,406,363) a tax equalizer of 1.4153, and a tax rate of

11.44 per $100 Dollars of assessed valuation with a

capitalization rate of eleven percent. The net income that

was capitalized was $1,487,208. If a capitalization of nine

percent were to be used, the amount would be $1,307,410.

In the course of this litigation, the contention was made

that the recommendation made by Mr. Mullen was not

correct because he did not have all the data. That the in-

formation subsequently given Mr. Maurice Connors,

Director of Research & Standards (whether obtained for

settlement purposes or for discovery) resulted in a correct

determination. The Assessor in his affirmative defense

makes the following judicial admission,

“If the Assessor has had all the evidence he now has

at the time he made his initial assessment herein,

and the Assessor’s recommendation to the Board, the

assessment and the Assessor’s recommendation

would have been $4,376,659.”

The pen ye sought to exclude the financial report of

Brook and Grisby sent to the Assessor. (The court does

not regard it as a certified audit or an audit because

Mr. Grisby regarded it as less than an audit report.)

Nevertheless, it contains admissions. Taxpayer argues

that the report was submitted for purposes of com-

promise and settlement of the litigation. (See plaintiff's

exhibit 13.) The States Attorney maintains that a copy

was forwarded to him on the basis of discovery.

The court in permitting the admission of the report

stated it was admitted for a limited purpose. The limited

App. 37

purpose is predicated in the distinction to be made of an

offer to compromise or an actual finished compromise

and negotiations of an admitted liability.

The offer of compromise is not admissible. Admissions

of fact during the negotiation are admissible. Domm v.

Hollenbeck, 142 Ill. App. 439 (1908). See Jones on Evi-

dence, page 532. (This position is in marked contrast

with the Federal Rule of Evidence 408, 65 F.R.D. 131,

144) In Cleary Book of Evidence (1972) eited by Cleary

and Graham in the Handbook of Evidence, Third Edi-

tion, the writers point out, page 151, “statements made

in connection with compromise negotiations may be

sheltered by the addition of phrases of qualification such

as ‘without prejudice’ or ‘hypothetically speaking’ McCor-

mick, Evidence 99234.” This was not done by the tax-

payer. Cleary agrees with the position taken by Jones as

to the admissibility of facts which are admitted during

negotiations.

Mr. Connors in arriving at his valuations stated that he

capitalized the income, but removed what he regarded as

“irrelevant expenses, namely: depreciation, loan service,

owner expense of interest, certain lease expense, real es-

tate taxes and tenant improvement. Based upon the fac-

tors in capitalization he concluded that the fair cash

value was $10,941,648 and using the 40 percent category,

he concluded that the assessed valuation would then be

$4,376,659. Mr. Connor was cross examined as to the

allowable expenses permitted by the Assessor manual.

Hence, with reference to the determination of value

made by the two experts from the Assessor’s Office—

made at different times and upon varied information—

each concluded, predicated upon the capitalization

method that the 8 million assessment was improper.

The financial statement (deft’s exhibit 4) for the year

ending December 31, 1978 indicates that the gross in-

come of the property was $3,065,463. (The projected in-

come by the taxpayer in data submitted to the Assessor

was an adjusted net income of $1,307,661, (plaintiff's ex-

hibit 13.) second evaluation of the Assessor's based

App. 38

upon the financial statement used a stabilized net income

figure of $1,739,722.) The court accepts the figure of $3,-

065,463. The court is in accord with the closing argument

of the State’s Attorney with reference to the capitaliza-

tion method and figures to be utilized. This means that

the following expenses would be allowed:

Loan service commitment fee

Insurance

Lease expense

Building operation

Amortization—(capitalized lease costs)

Repairs

Legal and professional miscellaneous.

This brought the income figure to an adjusted $1,554,167.

The capitalization factor was computed as follows:

Overall rate .09 percent

Rate of 11.524 x effective

assessment of .59864

resulted in a capitalized

rate attributable to

taxes of, .06898

The overall capitalization 15.9

$1,554,167 adjusted income, capitalized at 15.9, results

in a fair market value of $9,775,865. With a property

classification of 40 percent produces an assessed value of

$3,910,346.

This is in contrast with the taxpayer’s indicated

market value of $8,491,305 and an assessment of $3,396,-

522.

As a judicial tribunal, the Board possesses the dis-

cretionary action inherent to a court. Like a court—the

exercise of that discretion is bounded by rules and prin-

ciples of law. Discretion is the exercise of an option

promulgated on facts and the law.

Commissioner’s Semrow’s conclusion that,

“We denied the R.R., because we were not provided

in our opinion, evidence enough to come to any

App. 39

reasonable conclusion on this case,” is an option that

the Board could exercise if founded upon a standard

of a burden of proof and upon the facts and the law.

However, an examination of the evidence and the

testimony that was adduced does not warrant or substan-

tiate the conclusion reached. This court found the testi-

mony confusing and contradictory—e.g.

“Q—So it is your opinion then that the cost approach

in this particular case would be appropriate because

of when the building was built?

A—It was one of them that I took in deep considera-

tion.”

At another time, the Commissioner testified as follows:

“I didn’t establish a cost approach, | didn’t establish

an income approach, I based my whole judgment on

the way I answered the question sometime before.”

On another occasion, the Commissioner concluded,

“The Board of Appeals is totally autonomous and we

use our own standards, our own judgment and that’s

how cases are determined.”

The taxpayer submitted the customary complaints ac-

companied by an extensive petition. Exhibits to the peti-

tion included,

1— Application for payment and sworn statement for

Contractor and Subcontractor to owner.

2—Footage rented by month for the year 1978.

3—Office building tenant roster as to space and oc-

cupancy.

4—Comparative statement of earnings for 12

months, ending September 30, 1978.

In addition, there was submitted the “recommendation”

of the Assessor.

The taxpayer created a prima facie case which of

course was rebuttable. The taxpayer’s case had to be

resolved in accordance with the proper standards.

App. 40

An examination of the property’s valuation had to be

undertaken according to established rules for property

valuation. The primary rule of market values is to be

used. However, as here, where no market value could be

determined or where the market value is not truly reflec-

tive of worth, reproduction cost less depreciation and

a ization of income are to be employed. This was not

one

JUDICIAL NOTICE—PRIME RATE,

INFLATION AND JUSTICE

The classical rendition of the concept of judicial notice

was made in Chicago v. Murphy, 313 Ill. 98, 102, wherein

the court stated,

“Courts a resumed to be no more ignorant than

the public generally, and will take judicial notice of

that which everyone knows to be true.”

The court may therefore take judicial notice of a varie-

ty of economic and financial facts and conclusions. In-

cluded therein the court may take note of the changing

value of money as well as the current status of our infla-

tion and its impact upon property. In Downs v. Baltimore

& Ohio R.R. Co., 345 Ill. App. 118, 134, the court took

judicial notice of the substantial shrinkage in the value of

the dollar. It has been the policy of our courts to take

judicial notice of specific financial facts of a public

character which are of a generalized nature and of readi-

ly verifiable certainty.

The taxpayer paid under protest the amount of taxing

predicated upon the original assessment. There was

evidence in the record that at the time of the tax obliga-

tion, the taxpayer suffered from a negative cash flow.

Hence, if the taxpayer had to comply with the statutory

mandate of posting an additional $800,000, it alleges that

it would cost the taxpayer at the time of the complaint an

additional $213,986 for two years based upon a prime

rate of 13.25 percent per year. The current rate is 20

percent. In addition, assuming that the $800,000 was

App. 41

deposited—at the current inflation rate of 18 percent—

the $800,000 upon return would be debased in purchas-

ing power from the time of the initial deposit.

Justice Cardoza warned against the creation of “mis-

fortune of forcing methods of taxation and collection

with a Procrustean Formula.” The unrelenting process of

tax collection cloaked by statutory punctiliousness in all

circumstances can and does create injustice. This rigid

adherence and its consequence was rejected by our

Supreme Court when it said,

“Under these circumstances, it would be extremely

unfair and unjust for this court to adhere to a

rigid formula which would require that all relief

from fraudulently excessive assessments be sought

through the legal remedy provided by statute. This

is a proceeding in equity and a court of equity is not

bound by strict formulas but may ‘shape its remedy

to meet the demands of justice in every case,’ however

prt " (Hoyne Savings & Loan Assn. v. Hare, 60

l1.2d 84, 90)

Therefore under the equitable powers of this court, it

has sought to shape a remedy for the taxpayer “to meet

the demands of justice” in this case.

THE CONSTITUTIONAL ISSUES

When asked to declare a statute unconstitutional, trial

courts especially must exercise great restraint and

employ careful consideration. Hence, the court must ex-

amine the constitutional question with due deliberation.

The exercise of judicial power in this area requires the

court to bear in mind the fundamental rules of construc-

tion as established by our judicial system.

“A statute is presumed to be valid and al! doubts or un-

certainties arising either from the language of the con-

stitution, or the act itself, must be resolved in favor of the

validity of the act; and this court will assume to declare it

void only in the case of a clear conflict with the constitu-

tion. We have further held that it is the duty of this court

to so construct acts of the legislature as to uphold their

App. 42

constitutionality and validity if it can reasonably be done,

and further, that if their constitutionality is doubtful, the

doubt will be resolved in favor of the validity of the law

attacked.”

(People v. Adduci, 412 Ill. 621, 624)

“While the passage of time is not conclusive as to the

validity and constitutionality of a statute, it creates a

strong presumption against its invalidity.

(People v. Jarmuth, 386 Ill. 66, 76)

“A court is never warranted in declaring a legislative

enactment void unless it clearly and palpably transcends

the fundamental! law.”

(People ex rel. Curren v. Schommer, 392 Ill. 17)

“A trial court will not consider constitutional questions

if the case may be disposed of on other grounds.”

(People v. Vandiver, 51 Ill.2d 525, 258)

“The judicial power to determine the constitutionality

of legislation is to be exercised only where it is essential

to the disposition of the case, and where, as here, both

constitutional and non constitutional issues are raised, we

will not consider the constitutional issues if the cause can

be determined on other grounds, even though we acquire

jurisdiction of the case because a constitutional question

is involved.”

(Bismarck Hotel Co. v. Petriko, 21 Ill.2d 481, 485)

The matters before this court have been determined

upon grounds other than constitutional—Hence, there is

no need to consider the alleged constitutional violations.

The relief granted in a court of equity where constructive

fraud exists in the assessment meets the ends of justice.

Constructive fraud is a juridical concept. Our Supreme

Poop taco ex rel. Nordlund v. S.B.A., 34 I11.2d 373 at

’ sa) ,

Png nme this “Y” yoo oy fraud) =

legal concepts, is not suscept to prec

definition. Our system of juris-prudence requires

that these inexact criteria be dealt with on a case-to-

case basis. It is fundamental however, that it is not

App. 43

the function of the judiciary to act as a super Board

of Review, but only to protect the public from

fraudulent discriminatory taxation and clear abuse

of administrative authority.”

Principles governing challenges to assessments have

generally been explicated by our courts as follows: To

sustain the proof that constructive fraud was per-

petuated, the evidence of the taxpayer must be clear

and sufficient. It must clearly establish that the assess-

ment was made in ignorance of values, mistake or in

that ascertainable facts were disregarded, or that the

Assessor did not exercise honest judgment because of

conduct which sought by design to im excessive

valuation. In essence, the evidence establishes that honest

judgment was not exercised and in lieu thereof there was

wilful and intentional discrimination. An assessment

merely because it is excessive does not constitute fraud,

and the court will not set aside an assessment because of

a difference of opinion as to value. The issue here is one of

mistake and not a difference of opinion as to value.

COUNT II

SECTION 1983 TITLE 42

The taxpayer in Count II seeks damages against Com-

missioners Semrow and Zaban in the amount of $100,000

pursuant to Section 1983, Title 42 of the United States

Code. At the conclusion of the plaintiff's case, the court

sustained a motion by defendants for judgment.

Section 64 (3) of the Civil Practice Act specifically re-

quires the trial court in a bench trial “to weigh the

evidence including any which may be favorable to defen-

dant which necessarily requires the court to draw

reasonable inference therefrom, determine the credibility

of witnesses, and then simply not decide whether the

—y~ has made out a prima facie case, but make a

nal determination and enter judgment for defendant if

the plaintiff has not met his burden of proof by pre-

rance of the evidence.”

(Hawthorne Mellody Farms Dairy v. Rosenberg, 11 IIl.

App.3d 739)

App. 44

In applying this standard, the court concluded that

pursuant to the criteria established in Fulton Market

Cold Storage v. Cullerton, 582 F.2d 1071, that the plain-

tiff taxpayer failed to clearly establish that the Com-

missioners Semrow and Zaban intentionally or with

reckless disregard, violated the constitutional rights of

the taxpayer.

COUNT III

WRIT OF CERTIORARI

The court as to the writ of certiorari is limited only to

an inspection of the records of the Board’s proceedings.

The court cannot question facts or decide them. There

can be no extrinsic evidence. The court has examined the

record and finds that the Board proceeded illegally.

Therefore, the proceeding before the Board of Appeals is

hereby quashed.

CONCLUSION

The court finds the equity with the plaintiff. However,

an order shall be prepared in conformity with this

Memorandum of Decision and its determination that the

proper assessed valuation is $3,910,346. The taxpayer has

seen fit to pay under protest tax liability monies predi-

cated upon the initial assessment—additional sum is due

to the collector, based upon the court’s determination of

the assessed valuation.

/s/ Earl Arkiss

Judge

App. 45

IN THE

CIRCUIT COURT OF COOK COUNTY, ILLINOIS

COUNTY DEPARTMENT, CHANCERY DIVISION

[April 22, 1980]

FIRST NATIONAL BANK AND TRUST COMPANY OF

EVANSTON, as Trustee under Trust Agreement dated

March 17, 1975, and known as Trust No. R-1809,

Plaintiff,

No. 79 CH 6357 v8.

EDWARD J. ROSEWELL, Treasurer of Cook County,

Illinois, et al.,

Defendant.

FINAL INJUNCTION ORDER

This cause coming on for decision, the Court having

considered the testimony, evidence and arguments of

counsel and being fully advised in the premises; and the

Court having issued a Memorandum of Decision in this

matter:

Now, THEREFORE, the Court finds:

1. It has jurisdiction of the subject matter and the

parties to this action;

2. The total assessment complained of herein ($8,088,-

356) is constructively fraudulent and under the unusual

facts of this case (as set forth more fully in the Memoran-

dum on Decision which is incorporated in this Order by

reference) injunctive relief is proper.

3. In denying relief to the plaintiff, the Board of

Appeals proceeded illegally.

4. The equities are with the plaintiff in that the

proper total assessed valuation is $3,910,346.

App. 46

5. Plaintiff has failed to sustain its burden of proof

with respect to Count II of the First Amended Complaint.

WHEREFORE, it is hereby ordered that:

1. Upon Count II of the First Amended Complaint,

judgment is entered in favor of the defendants and

against the plaintiff;

2. The proceedings before the Board of Appeals is

hereby quashed;

3. Plaintiff shall pay by certified check to the Collec-

tor the $86,920.93 referred to on Schedule A attached

hereto plus interest at 2% on the amounts set forth in the

columns marked “Additional Payment Due” on or before

21 days after the entry of this order. The County Collec-

tor, and all defendants, are permanently enjoined from

ever collecting or attempting to collect any additional

tax, interest or penalties for the ten parcels listed in

Schedule A for tax year 1978, other than the aforesaid

$86,920.93.

4. Defendants shall mark their Warrant Books and

Tax, Judgment, Sale, Forfeiture and Redemption Record,

and other records, to reflect the entry of this permanent

injunction.

ENTER:

/s/ Earl Arkiss

Judge

Date: April 22, 1980

James A. Rooney

Room 2736

30 North LaSalle Street

Chicago, Illinois 60602

(312) 263-0911

Attorney for Plaintiff

11-18-311-009

11-18-311-010

11-10-311-017

11-18-311-018

11-18-311-022

11-18-311-024

11-18-311-030

11-18-311-031-8002

11-18-311-032-8002

11-18-311-033

TOTALS

Original Correct

Assessed Assessed Correct 1978 Tax

Valuation Valuation 1978 Tax Previously Paid

$50,726 $26,002 $4,484.56 $3,970.02

51,398 26,674 4,600.38 4,085.95

699,987 331,636 57,196.61 49,533.26

1,738,514 617,636 141,016.19 121,057.77

1,752,134 631,256 143,365.24 124,206.71

49,742 25,018 4,314,862 3,800.38

2,104,786 999,732 172,421.97 149,431.82

272,712 149,089 25,713,116 23,141.11

119,963 70,514 12,161.39 11,132.53

1,248,394 632,789 109,135.97 96,329.81

6,008,356 3,910,346 674,410.29 587,489.36

Additional

Payment Due

$ 514.54

$14.43

7,663.35

19,158.42

19,158.53

514,44

22,990.15

2,572.05

1,028.66

12,806.16

66,920.93

Ly ‘ddy

App. 48

IN THE

CIRCUIT COURT OF COOK COUNTY, ILLINOIS

COUNTY DEPARTMENT, CHANCERY DIVISION

FIRST NATIONAL BANK AND TRUST COMPANY OF

EVANSTON, as Trustee,

Plaintiff,

No. 79 CH 6357 v.

EDWARD J. ROSEWELL, et al.,

Defendants.

ORDER

This cause coming on to be heard on Defendants’ Mo-

tion to Vacate and Plaintiff's Reply to Motion to Vacate

and Counter Motion to Vacate, due notice served, the

court being fully advised,

It is hereby ordered that:

1. Defendants’ Motion to Vacate is denied. Plaintiff's

Counter-Motion to Vacate is also denied.

June 2, 1980

ENTER:

/s/ Earl Arkiss

Judge

Michael F. Baccash, A.S.A.

Attorney for Defendants

500 R.J.D. Center

Chicago, Ill. 60602

443-5444

App. 49

APPENDIX 4

ILLINOIS SUPREME COURT

JULEANN HORNYAK, CLERK

SUPREME COURT BUILDING

SPRINGFIELD, ILL. 62706

(217) 782-2035

January 28, 1983

Mr. James A. Rooney

Attorney at Law

69 W. Washington St., S#2313

Chicago, IL 60602

No. 55931—First National Bank and Trust Company of

Evanston, as trustee, etc., appellee, vs.

Edward J. Rosewell, Treasurer of Cook

County, Illinois, et al., etc., appellants.

Appeal, Appellate Court, First District.

The Supreme Court today DENIED the Petition for

Rehearing filed in the above entitled cause.

Very truly yours,

/s/ Juleann Hornyak

Clerk of the Supreme Court

App. 50

APPENDIX 5

IN THE

SUPREME COURT OF ILLINOIS

FIRST NATIONAL BANK AND TRUST COMPANY OF

EVANSTON, TRUST R-1809,

Plaintiff-A ppellee, Cross-A ppellant,

No. 55931 vs.

EDWARD J. ROSEWELL, Treasurer of Cook County,

Illinois,

Defendant-A ppellant,

HARRY H. SEMROW and SEYMOUR ZABAN, Commissioners

of the Board of (Tax) Appeals of Cook County, Illinois,

Defendants-A ppellants, Cross-Appellees,

THOMAS C. HYNES, Assessor of Cook County, Illinois,

Defendant.

Appeal from the Appellate Court of Illinois

First Judicial District

NOTICE OF APPEAL TO THE

SUPREME COURT OF THE UNITED STATES

Notice is hereby given that First NATIONAL BANK

Or EVANSTON, Trustee, the Plaintiff-Appellee, Cross-

Appellant herein, hereby appeals to the Supreme Court

of the United States from the final j nt of the

Supreme Court of Illinois entered Novem 18, 1982,

Petition for Rehearing denied by Order dated January

App. 51

28, 1983, affirming in part and reversing in part the

judgment of the Appellate Court of Illinois, First Judicial

District, entered in this action.

This appeal is taken pursuant to 28 U.S.C. §1257(2).

FIRST NATIONAL BANK

OF EVANSTON, Trustee,

Plaintiff-Appellee, Cross-Appellant

By: /s/ James A. Rooney

Room 2313

69 West Washington Street

Chicago, Illinois 60602

(312) 332-2600

Attorney for the Plaintiff-

Appellee, Cross-Appellant.

[Filed Feb. 4, 1983]

App. 52

IN THE

SUPREME COURT OF ILLINOIS

FIRST NATIONAL BANK AND TRUST COMPANY OF

EVANSTON, TRUST R-1809,

Plaintiff-A ppellee, Cross-Appellant,

No. 55931 vs.

EDWARD J. ROSEWELL, Treasurer of Cook County,

Illinois,

Defendant-A ppellant,

HARRY H. SEMROW and SEYMOUR ZABAN, Commissioners

of the Board of (Tax) Appeals of Cook County, Illinois,

Defendants-A ppellants, Cross-A ppellees,

THOMAS C. HYNES, Assessor of Cook County, Illinois,

Defendant.

NOTICE OF FILING AND

PROOF OF SERVICE

To: THomas J. MCNULTY, Esq.

Assistant State’s Attorney

Room 500-Daley Center

Chicago, Illinois 60602

Attorney for Defendants-A ppellants,

Cross-A ppellees

PLEASE TAKE NOTICE that on Wednesday, February 2,

1983, we filed our Notice of Appeal to the Supreme Court

of the United States with the Clerk of the Supreme

App. 53

Court, Supreme Court Building, Springfield, Illinois

62706.

/s/ James A. Rooney

Room 2313

69 West Washington Street

Chicago, Illinois 60602

(312) 332-2600

Attorney for the Plaintiff-

Appellee, Cross-Appellant

CERTIFICATE OF SERVICE

JAMES A. ROONEY, an attorney, hereby certifies that he

served a copy of this Notice of Filing and attached Notice

of Appeal on Assistant State’s Attorney THOMAS J. Mc-

NULTY, by personal delivery to him in his offices at 500

ony Center, Chicago, Illinois 60602 on February 2,

/s/ James A. Rooney

Attorney

App. 54

APPENDIX 6

SUPREME COURT OF THE UNITED STATES

No. A-847

FIRST NATIONAL BANK OF EVANSTON, ETC.,

Appellant,

Vv.

EDWARD J. ROSEWELL, COUNTY TREASURER, ETC., ET AL.

ORDER

UPON CONSIDERATION of the application of counsel for

the appellant,

IT Is ORDERED that the time for docketing an appeal in

the above-entitled cause be, and the same is hereby, ex-

tended to and including June 27, 1983.

/s/ John Paul Stevens

Associate Justice of the Supreme

Court of the United States

Dated this 20th day of April, 1983

App. 55

APPENDIX 7

NO. 55931

IN THE

SUPREME COURT OF ILLINOIS

First NATIONAL BANK AND TRUST COMPANY OF

EVANSTON, Trustee,

Plaintiff-A ppellee, Cross-Appellant,

vs.

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

Defendants-A ppellants, Cross-A ppellees.

Appeal from the Appellate Court, First District.

PETITION FOR REHEARING

JAMES A. ROONEY

Room 2313

69 West Washington Street

Chi , Illinois 60602

(312) -2600

A for Plaintiff-

Appellee, Cross-Appellant

[Date: December 8, 1982]

App. 56

NO. 55931

IN THE

SUPREME COURT OF ILLINOIS

First NATIONAL BANK AND TRUST COMPANY OF

EVANSTON, Trustee,

Plaintiff-Appellee, Cross-Appellant,

vs.

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

Defendants-A ppellants, Cross-Appellees.

Appeal from the Appellate Court, First District.

PETITION FOR REHEARING

Now comes the petitioner, FIRST NATIONAL BANK OF

EVANSTON, Trustee, by its attorney, JAMES A. ROONEY,

and, pursuant to Rule 367, petitions for a rehearing of

this appeal.

In support of this petition, petitioners believe that this

Court's opinion of November 19, 1982 has misconstrued

or overlooked the following points.

a

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7

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a

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-

=

*

WEBB’S FABULO

App. 57

earned on funds successfully protested was not con-

stitutionally prohibited. (Slip Opinion, page 5)

This Court has overlooked the fact that the county

receives another return for services rendered in connec-

tion with the _—- of payment under protest. The

county is allowed to ma § 100% of the interest earned on

unsuccessfully protes funds. (This is so even under

Public Act 82-598.) Therefore, Webb’s is controlling and

the keeping of 100% of the interest earned on successfully

protested funds is unconstitutional.

As early as 1915 this Court adopted the rule that in-

terest follows the principal where funds are deposited

subject to order of court. Galpin v. City of Chicago (1915)

269 Ill. 27, 57. As was pointed out to this Court, at the

time Lakefront Realty Corp. v. Lorenz (1960) 19 Ill.2d 415

was decided, there was no statutory requirement that the

protest fund be invested and there was, therefore, no in-

terest available to be distributed.' Section 192(a) of the

Revenue Act was added effective August 1, 1961.

Finally, this Court has deemed the protested funds not

to be private funds. The Supreme Court of Florida had

found the funds in Webb's to be public funds. The

Supreme Court of the United States reversed stating:

‘“(A) State, by ipse dixit, may not transform private

ng oo | into public property without compensation, even

ae limited duration of the deposit in court.” (449 U.S.

at )

' In finding the Illinois remedy of payment under protest

“plain S15 efficient” for purposes of the Tax Injunction

Act oot Oe poay the nt eee of the United States in

National Bank (1981), 450 U.S. 503, 67

raed 464, 101 OL BCL 1221 obviously assumed that Illinois

would have to appropriate funds to the interest. See foot-

note 36 of the opinion at 450 U.S. court was unaware

that interest was earned on the protested funds t

to Section 192(a) of Revenue Act. Given this Webb's

lackman in

it is debatable whether the Supreme Court of the United States

would reaffirm its holding in Rosewell.

App. 58

Petitioners submit that funds which are successfully

protested are refunded because they are found not to be

ublic funds. The fact that our state statutes force the

unds to be paid to the collector until that finding is made

does not transform the funds from private property to

public property.

II

THE ALLOWANCE OF THE RETENTION OF IN-

TEREST AS AN JN LIEU FEE FOR ADMINISTERING

THE PROTEST FUND VIOLATES SECTION a) OF AR-

TICLE VII OF THE CONSTITUTION OF ILLINOIS.

The defendant taxing officials did not argue that the

retention of all interest earned on successfully protested

funds was a fee for services rendered. Petitioners’

supplemental brief (at pages 34-35) pointed out that such

a construction would, however, amount to the fee being in

hae of section 9(a) of article VII of the Constitution

of Illinois.

This Court’s opinion construed the retention of interest

as an in lieu fee but never responded to the argument

that such a fee would be unconstitutional.

Petitioners submit that this Court’s opinion is in direct

opposition to Saltiel v. Olsen (1979), 77 Ill.2d 23, 25-27;

ldstein v. Rosewell (1976), 65 Ill.2d 325, 329-330; and,

City of Joliet v. Bosworth (1976), 64 Ill.2d 516, 523-531.

The retention of interest earned on the taxes disbursed

(either to the taxpayer or the taxing district) is the type

of hidden tax which the constitutional provision was

designed to prevent.

As this Court stated in City of Joliet v. Bosworth (1976),

64 I11.2d 516, 531-532:

“The constitutional provision in the case before us. . .

reflects a determination by the framers of the Con-

stitution that the collection of taxes by county of-

ficers is a county function which should be supported

by county taxes.”

App. 59

The administration of the protest fund is but one of the

many steps taken by the collector in the process of collec-

tion of taxes.

Ill

THE OPINION OF THIS COURT FAILS TO GIVE

EFFECT TO THE LEGISLATURE’S INTENT WHEN IT

PASSED PUBLIC ACT 82-598.

While admitting that Public Act 82-598 amended the

payment-under-protest remedy to provide for a refund of

interest earned on successfully protested funds, this

Court, without citation, stated:

“that action (of the General Assembly) does not in-

dicate that the remedy was previously inadequate.”

(Slip opinion, page 4) (Insert for clarity)

This Court has repeatedly held that where a remedial

statute is changed or amended while a case is on appeal,

this Court must decide the case on the basis of the law in

effect at the time the opinion is issued. Landesman v.

General Motors Corp. (1978) 72 Il1.2d 44, 48; Steinberg v.

Chicago Medical School (1977) 69 I1l.2d 320, 337.

Moreover, in construing any statute, this Court should

ascertain and give effect to the intent of the General

Assembly by considering the reason or necessity for the

amendment; contemporaneous conditions; existing cir-

cumstances; the object sought to be obtained or the

defects sought to be remedied by the amendment and the

betterment or improvement of existing remedies. Baker

v. Conrad (1936) 364 II]. 386, 392-398; Moyer v. Bd. of Ed.

of School Dist. No. 186 (1945), 391 Ill. 156, 162.

This Court has admitted that stare decisis (in this case

citation of Lakefront Realty Corp. v. Lorenz (1960), 19 Ill.

2d 415 and Clarendon Associates v. Korzen (1973), 56 IIl.

2d 101) weighs heavily in statutory construction, but the

legislature is free to change court interpretations of its

legislation. Williams v. Crickman (1980), 87 I1l.2d 105,

111. Reenactment implies that judicial construction is ap-

“proved of by the legislature. Union Elec. Co. v. Illinois

Commerce Commission (1979), 77 Ill.2d 364, 380. How-

App. 60

ever, amendment suggests either that the legislature

has effected a conscious change in policy or that it has

simply prevented the recurrence of an erroneous inter-

pretation. People ex rel Clark v. Wheeling (1962) 24 II1.2d

267, 268-269.

The enactment of Public Act 82-598 is a conscious

change in policy in reaction to recent language from the

Supreme Court of the United States. The legislative

history makes clear that the General Assembly which

enacted Public Act 82-598 has declared the remedy, as it

existed, inadequate. (Supplemental Brief—Appendix, D-

7 through D-25) If, after a statute has been construed and

interpreted, the legislature makes radical changes, an in-

tention is thereby shown to establish a rule different from

that announced by the courts. Dworak v. Temple (1958),

18 Ill. App.2d 225, 230, affd. 17 Ill.2d 181; C.F. In re

Zimmerman’s Estate (1978), 63 Ill. App.3d 560.

Despite this Court’s earlier pronouncements that the

remedy was adequate, the General Assembly has the

authority to overrule this Court by amending the statute.

They have unequivocally done so and this Court must

give effect to their intent and the motives behind the

change in the law. People ex rel Gamble v. McKinstry

(1942), 379 Ill. 528, 531.

CONCLUSION

This Petition for Rehearing should be allowed.

Respectfully submitted,

JAMES A. ROONEY

Room 2313

69 West Washington Street

Chicago, Illinois 60602

(312) 332-2600

Attorney for Plaintiff-Appellee,

Cross-A ppellant

Date: December 8, 1982

App. 61

APPENDIX 8

IN THE

SUPREME COURT OF ILLINOIS

(Decided March 25, 1983;

Rehearing Denied May 27, 1983)

Docket No. 55910—Agenda 29—September 1982.

SHELL OIL COMPANY, et al., Appellees, v. THE DE-

PARTMENT OF REVENUE et al., Appellants.

JUSTICE WARD delivered the opinion of the court:

The question on this appeal is whether a taxpayer

whose protest had been upheld is entitled to interest in-

come earned on the erroneously assessed taxes that by

order of court were paid into a protest fund and held by

the State Treasurer as trustee. We granted the plaintiffs’

petitions for direct appeal under our Rule 302(b) (78 III.

2d R. 302(b)).

In 1979, the Department of Revenue, pursuant to

statutory provision (Ill. Rev. Stat. 1979, ch. 34, par.

409.1), assessed county retail occupation taxes against

Shell Oil Company (Shell) on sales of jet fuel by Shell to

American Airlines in 1974, 1975, and 1976. The total tax

assessment, was in the amount of $1,182,535, and accrued

interest of $552,901 was claimed. The Department’s

assessment against Shell for sales of fuel in the same

years to United Airlines was $1,996,695 in taxes, and

$923,895 were claimed as interest. The two airlines, pur-

suant to provisions in their contracts with Shell, paid the

taxes and interest under protest. Shell, American Air-

lines and United Airlines brought an action on

September 26, 1979, against the Department of Revenue,

the Director of Revenue and the State Treasurer to

recover the taxes paid under protest, pursuant to “An Act

in relation to the payment and disposition of moneys

received by officers and employees of the State * * *.” (Ill.

App. 62

Rev. Stat. 1979, ch. 127, par. 170 et seq.) (the Protest

Monies Act). On the same day the circuit court of Cook

County entered orders enjoining the defendants from

depositing any of the protest funds into the State

Treasury. The defendants did not file answers to the com-

plaints until June 4, 1980, and the two cases were con-

solidated on September 28, 1980. On February 6, 1981,

the circuit court held for the plaintiffs and granted sum-

mary judgment against the defendants and ordered that

the moneys paid under protest be refunded. No appeal

was taken by the defendants.

While these actions were pending in the circuit court,

interest was earned on the protest funds through invest-

ment by the State Treasurer, who, as trustee, was

holding the moneys in special funds. The Treasurer,

however, instead of crediting the interest earned to the

protest funds, deposited the interest in the State’s general

revenue fund. When the circuit court entered summary

judgment in favor of the plaintiffs, they laid claim to the

interest which had been earned on the protest funds dur-

ing the pendency of their actions. On August 13, 1981, the

court held that the plaintiffs were entitled to the interest

income earned. Six days later the trial court entered

orders directing the defendants to issue credit memoran-

da in favor of the taxpayers for $244,563.44, the interest

earned on the American Airlines protest fund and for

$411,579.29, the interest earned on the United Airlines

protest fund. The Department of Revenue filed notices of

— to the appellate court, and we granted the plain-

tiffs’ petitions for direct appeal to this court under Rule

302(b) (73 Ill. 2d R. 302(b)).

A taxpayer who questions the correctness of an assess-

ment of retailers’ occupation tax may (1) withhold pay-

ment of the tax and receive an administrative hearing

following receipt of a notice of tax liability from the

Department of Revenue; or (2) pay the tax, file a claim

for credit or refund, and have an administrative hearing

after protesting the Department’s notice of tentative

determination of claim (see Ill. Rev. Stat. 1979, ch. 120,

par. 440 et seg. (the Retailers’ Occupation Tax Act)); or (3)

App. 63

pay the tax under protest pursuant to the Protest Monies

Act and have the circuit court pass upon the protest

(Chicago & Illinois Midland Ry. Co. v. Department of

Revenue (1976), 63 Ill. 2d 474). (See Chester, View of the

Taxpayer's Attorney on Revenue Litigation, 54 Chi. B.

Rec. 173 (1973).) The taxpayer here chose the third op-

tion, paying the tax under protest. The plaintiffs succeed-

ed in their protest actions and are now defending the cir-

= court’s award of the interest earned on the protest

unds.

Interest is not normally recoverable, in the absence of a

statute or an agreement providing for it. (Lakefront Real-

ty Corp. v. Lorenz (1960), 19 Ill. 2d 415.) In Lakefront

Realty, this court considered for the first time whether

interest should be allowed in the case of tax refunds. The

court observed that though in some jurisdictions it has

been held that, where a taxpayer is entitled to a refund

because of an overpayment of taxes, he is entitled also to

interest on the refund, it would not allow interest on tax-

refund payments in the absence of a statute expressly

providing for it. The court stated that “interest, being a

creature of statute, is recoverable only by statute or con-

tract, and * * * a tax collector, being a mere trustee of

public funds collected for specific purposes, has no money

to pay interest in the absence of statutory authority to es-

tablish a fund for that purpose.” (19 Ill. 2d 415, 423.) Had

the taxes here been paid under the second option describ-

ed above and had the protest been upheld, the taxpayer

would be entitled to statutory interest of % of 1% per

month under section 6 of the Retailers’ Occupation Tax

Act (Ill. Rev. Stat. 1979, ch. 120, par. 445.) The Protest

Monies Act, however, does not have a provision for in-

terest on a refund of protested taxes. That the legislature

did not include a provision for interest, the defendants

argue, shows an intent to deny recovery of interest to a

taxpayer who has been successful! in a protest action un-

der the Protest Monies Act. Too, it is argued, that the

allowance of interest would constitute a money judgment

against the State in violation of its sovereign immunity.

App. 64

We do not disagree with the observation that a tax-

payer who has successfully challenged an assessment of

taxes by way of the Protest Monies Act is not entitled to

recover interest on the protest funds simply as a matter

of course. We consider, however, that the taxpayer here is

entitled to the interest earned by investment of the

protest funds.

The circumstances here differ from those in Lakefront

Realty in that interest income was actually earned on the

protest funds. Payment of the interest income to the

successful taxpayer does not present the problem in

Lakefront Realty, where no money was available to pay

interest on the fund. The case here is not one in which the

taxpayer is requesting interest on the protest fund as a

matter of course. The taxpayer is simply seeking the in-

come earned from money it was determined it had no

legal duty to pay as taxes. The interest income, as it ac-

crued, belonged neither to the State nor to the county for

whose benefit the taxes were collected. The Treasurer’s

authority, as trustee, to invest these funds did not affect

the ownership of the funds or entitle him to keep the in-

terest so earned. Cf. Town of City of Peoria v. O'Connor

(1981), 85 Ill. 2d 195, 207.

Even in the absence of statutory authorization, a court

may award interest in a proceeding against the State if

equitable considerations warrant it, as long as the effect

of doing so does not constitute the entering of a money

judgment against the State. (City of Springfield v.

Allphin (1980), 82 Ill. 2d 571, 579.) Whether an award of

interest would be a money judgment against the State

can be determined by examining the source from which

the interest money would be paid. In Campbell v. Depart-

ment of Public Aid (1975), 61 Ill. 2d 1, this court held that

the appellate court’s order requiring the Department of

Public Aid to make retroactive payments to the plain-

tiff, even the appropriations out of which the

payments would be le had lapsed, was a monetary

judgment against the State and therefore prohibited. In

Campbell it was noted that the record contained “nothing

relevant to the availability of funds with which to pay the

App. 65

sums ordered paid.” (61 Ill. 2d 1, 6.) The record here,

however, discloses that the interest income earned by the

Treasurer is available to pay the taxpayer. An award of

the interest income will not result in a money judgment

against the State, since the Treasurer will pay the in-

terest generated in his capacity as a trustee. Too, the ul-

timate source of the interest income is the bank or other

entity with which the fund was invested.

At no time did the protest fund become the property of

the State. The Treasurer acted merely as trustee of the

protest fund (see Ill. Rev. Stat. 1979, ch. 127, par. 172)

and, as such, he is not entitled to any income or fee for his

services absent statutory authorization. (See Ill. Rev.

Stat. 1979, ch. 24, par. 8-11-1.) The protest action was in-

stituted simply to determine whether the county or the

taxpayer was entitled to the funds paid under protest. As

previously mentioned, the interest income never belonged

to the State. The Treasurer could not deny the taxpayer

the right to that income by transferring it to the State's

general revenue fund.

In addition, there is statutory authority for the pay-

ment of interest income from a protest fund to a tax-

payer. Section 2a of the Protest Monies Act (Ill. Rev. Stat.

1979, ch. 127, par. 172) requires the Treasurer to place

money paid under protest in a “special fund to be known

as the protest fund.” Section 1 of “An Act relating to cer-

tain investments of public funds by public agencies” (I]I.

Rev. Stat. 1979, ch. 85, par. 901) described special funds

as “public funds” for purposes of the Act. Section 2 states,

In part:

“All earnings accruing on any investments or

deposits made pursuant to the provisions of this Act

shall be credited to the public agency by or for

which such investments or deposits were made, ex-

cept where by specific statutory provisions such earn-

ings are directed to be credited to and paid to a

— fund.” (Ill. Rev. Stat. 1979, ch. 85, par.

)

App. 66

Specific statutory direction to credit accrued earnings to

the special protest fund appears in section 2 of “An Act in

relation to state moneys” (Ill. Rev. Stat. 1979, ch. 130,

par. 21), where it is provided:

“All interest received or paid on account of money in

the State treasury belonging to or for the use of the

State so deposited in banks, shall be the property of

the State of Illinois. If any moneys held in special

funds in the State treasury, not belonging to the

State, shall be deposited in banks pursuant to the

provisions of this Act, the interest received thereon

shall be credited to the special fund so deposited.”

Although it does not affect our decision here, we note

that the legislature has recently amended section 194 of

the Revenue Act of 1939 (Ill. Rev. Stat. 1981, ch. 120, par.

675) to provide for the payment of interest in cases of

refunded real property taxes paid under protest. The

amendment reads:

“Such amounts paid under protest and withheld

from distribution shall be deposited by the collector

in interest bearing accounts. If the final order of a

court on the protest results in a payment to the tax-

payer of all or a part of the taxes paid under protest

and withheld, all or a proportional share of such in-

terest earned during the pendency of the protest by

the amount repaid to the taxpayers shall also be paid

to the taxpayer. If the final order of a court on the

protest results in a payment to the taxing districts of

all or a part of the taxes paid under protest and

withheld, the interest earned during the pendency of

the protest by such taxes paid to the taxing districts

shall be paid into the county treasury.” Ill. Rev. Stat.

1981, ch. 120, par. 675.

On this appeal, the defendants have for the first time

questioned the authority of the circuit court to order the

issuance of credit memoranda in favor of the plaintiffs in

amounts equal to the interest earned on the protest funds.

The record contains an affidavit of one of the plaintiffs’

App. 67

attorneys which states that the assistant Attorney

General representing the defendants in the circuit court

told him that the defendants would not propose any

language for the order providing for the payment of in-

terest or suggest any means for payment.

It is axiomatic that questions not raised in the trial

court are waived and may not be raised for the first time

on appeal. (Snow v. Dixon (1977), 66 Ill. 2d 448, 453;

Kravis v. Smith Marine, Inc. (1975), 60 Ill. 2d 141, 147.)

The failure of the defendants to question the order for the

issuance of credit memoranda was a waiver of any objec-

tion to the court’s authority to enter the order. We would

note parenthetically that a trial court possesses wide dis-

cretion in fashioning an appropriate remedy in revenue

cases. City of Springfield v. Allphin (1978), 74 Ill. 2d 117.

For the reasons stated, the judgment of the circuit

court of Cook County is affirmed.

Judgment affirmed.

CLARK and MORAN, JJ., took no part in the considera-

tion or decision of this case.

App. 68

APPENDIX 9

STATE OF ILLINOIS

82ND GENERAL ASSEMBLY

STATE SENATE

TRANSCRIPTION DEBATE

Page 202 - May 27, 1981

SENATOR DAVIDSON:

The middle column. The first column is what they’re

receiving this fiscal year, the second column is what they

will receive if this formula, as we propose it at fifteen

hundred and sixty-six dollars and ninety-four cents and

the change in the weighting effect, become law, the last

column, the far right column, is what they would receive

at the level if there’s no change in the formula.

PRESIDING OFFICER: (SENATOR BRUCE)

10. Further discussion? Senator Davidson may close.

11. SENATOR DAVIDSON:

12. Just ask for an Aye vote. This is a, as Senator Berman

13. said, this is probably the opening round of the School

14. Funding Formula, which we usually have up several times for

15. discussion between now and June 30th. Ask for an Aye vote.

16. PRESIDING OFFICER: (SENATOR BRUCE)

17. | The question is, shall Senate Bill 954 pass. Those in

18. favor vote Aye. Those opposed vote Nay. The voting is open.

19. Have all voted who wish? Have all voted who wish? Have all

20. voted who wish? Take the record. On that question, the Ayes

21. are 46, the Nays are 11, none Voting Present. Senate Bill 954

22. having received the required constitutional majority is de-

23. clared passed. Senate Bill 955 is on the Tentative Agreed

24. List. 956 is an appropriation bill. We'll hold those until

WPNAAS orm

25. we... are we going to call those all at one time, Senator?

26. Alright. 957, Senator Bowers. Read the bill, Mr. Secretary,

27. please.

28. ACTING SECRETARY: (MR. FERNANDES)

29. Senate Bill 957.

30. (Secretary reads title of bill)

31. 3rd reading of the bill.

32. PRESIDING OFFICER: (SENATOR BRUCE)

33 Senator Bowers.

$9 G0 NS Or > COO

App. 69

STATE OF ILLINOIS

82ND GENERAL ASSEMBLY

STATE SENATE

TRANSCRIPTION DEBATE

Page 203 - May 27, 1981

SENATOR BOWERS:

Mr. President, before I start... Mr. President...

PRESIDING OFFICER: (SENATOR BRUCE)

Senator Bowers.

SENATOR BOWERS:

Before 1 . . . start on explaining this particular bill, .. .

I made an error on 941. I was working on the Agreed Bill

List, as a matter of fact, and punched a green light and

— to punch a red and I’d like the Journal to so

show.

PRESIDING OFFICER: (SENATOR BRUCE)

Our electronic tape will so indicate.

SENATOR BOWERS:

Now, with respect to the bill. Senate Bill 957 . . . seeks

to pay interest on tax objection money that is held by

local governmental] units or .. . or actually held by the

Treasurer for the benefit of local governmental units, during

the tax protest period. Under Illinois law, if you want to...

contest real estate taxes, you have to pay the tax under

protest then file your protest. The resolution of that may

take two to three to four years, depending upon what juris-

diction you’re in. Some of them may be somewhat less. And

under the law .. . there is no way for the taxpayer, if the

taxpayer wins, to obtain any interest on their funds. Now,

I had distributed to the membership an editorial from the

Chicago Tribune commenting on an Illinois . . . or a United

States Supreme Court case where all the Justices were critical

of the Illinois system, although they did hold in a split

decision, that the Federal Injunctive Act did not apply. But

under the circumstances it seems equitable that a taxpayer

ought to get interest on the funds during this period of

time and | would ask for a favorable roll call.

PRESIDING OFFICER: (SENATOR BRUCE)

App. 70

STATE OF ILLINOIS

82ND GENERAL ASSEMBLY

STATE SENATE

TRANSCRIPTION DEBATE

Page 204 - May 27, 1981

Is there discussion? Senator Netsch.

SENATOR NETSCH:

Thank you, Mr... . thank you, Mr. President. I rise in

support of this bill also. Senator Bowers is quite correct

that it is responsive to an inequity that was pointed out by

the United States Supreme Court and should have been evident

to everyone, even without the court decision. It is not

fair that people, whose money is tied up for that period of

time, receive no interest at all. Senator Bowers’ bill

would correct that and it is indeed an equitable approach.

PRESIDING OFFICER: (SENATOR BRUCE)

Further discussion? Senator Savickas.

SENATOR SAVICKAS:

Yes, Mr. President and members of the Senate, Senator

Netsch did touch on a very important point. The problem

though is that you will find that many people will be paying

under protest and I doubt if there would be anybody that

would just let their... pay their bills without being paid under

protest if they have any chance at all of receiving the

interest on it. Paying under protest would put a burden

on our local units of government, whether they are the

. school districts, the park districts, . . . museum districts,

because this money would not be available for them to use

and they’d have to go out and sell bonds and whatnot to

pay for it. 1 ...I1 think the idea is credible, but the

practical application would really harm our local units of

government. I would suggest that... we... bring this bill

. back for further study, .. . find some way that we can accom-

. modate the concerns of Senator Netsch, but also not hamper our

units of local government and burden them with . . . with the

. financial responsibility then of buying more bonds .. . selling

. more bonds to pay for operation while these things are under

protest. This will be an added burden. A tax increase would

1.

2.

3.

4.

5.

6.

7.

8.

9.

21.

BRESSRNSHSSL

App. 71

STATE OF ILLINOIS

82ND GENERAL ASSEMBLY

STATE SENATE

TRANSCRIPTION DEBATE

Page 205 - May 27, 1981

be necessary. The savings that would be saved ... or the

revenue produced for the .. . the individual that pays under

protest in getting interest on his taxes would be deleted

by the interest that would have to be paid for the bonds.

I would suggest that this bill be defeated.

PRESIDING OFFICER: (SENATOR BRUCE)

Further discussion? Senator Mahar.

SENATOR MAHAR:

Thank you, Mr. President and members of the Senate. I

rise in support of this bill. I’ve found several cases in

my area in which people found their taxes was .. . several

hundred dollars more than they really should have paid.

And the real problem here is it takes up to two years by

the time it goes... to... Judge Dempsey’s court in Cook

County and then goes back to the Treasurer’s Office for

payment. In the meantime, some of these people are people

who ... right now are out of work, . . . having problems and

they find that if . . . their home is mortgaged their mortgage

payments are increased and it’s a real problem. I think

it’s about time that .. . that when it’s acknowledged that...

there’s an overpayment that they ought to get interest

on their payment and I would ask for a favorable vote.

PRESIDING OFFICER: (SENATOR BRUCE)

Further discussion? Senator Berning.

SENATOR BERNING:

A question of the sponsor please. Refresh my memory

because admittedly there may be Statutory provisions now

that did not apply when | was county treasurer. At that

time admittedly, that’s outside Cook County we distributed

all tax i ar under protest. Is that now prohibited or

do you know?

PRESIDING OFFICER: (SENATOR BRUCE)

Senator Bowers.

© 90 ID OH GO HO

BRESSRNSRSSK:

App. 72

STATE OF ILLINOIS

82ND GENERAL ASSEMBLY

STATE SENATE

TRANSCRIPTION DEBATE

Page 206 - May 27, 1981

SENATOR BOWERS:

1 thought it had always been prohibited. I don’t know

how you could distribute money that is paid under protest...

until the protestor has lost. As a practical matter, ...

there’s no way of getting it back once you distributed it

and unless you save some back . . . now, I, frankly, don’t know

how you did it. As... my understanding of the law is this, that

if I want to follow the protest there’s a certain ... percentage

of that protested money that has to remain within the Treasurer's

. . . purview because otherwise if he doesn’t keep it...and the

protestor wins, .. . he has no way of getting it back from the

taxing district. So, as far as I know, in answer to your

question, no, he cannot distribute it if it’s paid under

protest and is actively being followed.

PRESIDING OFFICER: (SENATOR BRUCE)

Senator Berning.

SENATOR BERNING:

Well, that may . . . may be technically correct, but I

submit that . . . those tax dollars paid under protest are not

always resolved as far as the issue is concerned until after

the next taxing period or two, the money is always coming

in and is available for ... for .. . repayment, in the event

of a decision in favor of the protestor. But I guess mw

appropriate to this particular issue is, are you sugges’ 7

that all tax dollars paid under protest, regardless of tw

percentage of those dollars which wil! ultimately be dis-

tributed to the taxing district and in most instances that

is a substantial portion of the tax dollars, .. . are they all

going to earn interest then which will accrue to the benefit

of . . . the individual who paid under protest? That doesn't

seem to be quite proper either.

PRESIDING OFFICER: (SENATOR BRUCE)

Further discussion? Senator Kenneth Hal|. . . Senator Bowers.

9 CON POS coor

SEESSSNSRSSE:

App. 738

STATE OF ILLINOIS

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TRANSCRIPTION DEBATE

Page 207 - May 27, 1981

SENATOR BOWERS:

In answer to the question, Senator Berning, no. If

the —_ yer loses, the interest goes to the taxing body,

but if the taxpayer wins then .. . it’s obvious that he over-

_ his taxes and that the government, if you will, has

en holding his money . . . during that period of time...

during the protest procedure. So that the bill provides

that on those dollars that he wins back, which is, in

effect, the dollars he overpaid, he gets interest. It’s

that simple.

. PRESIDING OFFICER: (SENATOR BRUCE)

Senator Berning.

SENATOR BERNING:

Well, for the average taxpayer that’s liable to amount

to a dollar and thirty-seven cents. | think this .. . may be

a good noble gesture that’s going to be more of an adminis-

trative burden than the benefits can possibly be to the

taxpayer.

PRESIDING OFFICER: (SENATOR BRUCE)

Further discussion? Senator Kenneth Hall.

SENATOR HALL:

Will the sponsor yield to a question?

PRESIDING OFFICER: (SENATOR BRUCE)

Indicates he will yield. Senator Kenneth Hall.

SENATOR HALL:

Senator Bowers, I have . . . Senate Bill 263, which...

established the amount of real estate taxes ~ aid under

rotest that should be held for distribution by the collector.

ow, they’ve been doing that already for years down in m my

sew: 1 mean, .. . why do we need a bill now to do that?

=

PRESIDING OFFICER: (SENATOR BRUCE)

Senator Bowers.

nt

—

SERSSENSS:

POD SLO DN DOANE CON SLO OND OH CONS

App. 74

STATE OF ILLINOIS

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TRANSCRIPTION DEBATE

Page 208 - May 27, 1981

SENATOR BOWERS:

The bill addresses itself to the question of interest on

those funds if the taxpayer wins. Under the present law there

is no method for the taxpayer to recover any interest on

the funds that are, in fact, his and were an overpayment on

his taxes. When he wins and gets his money back, he gets...

he gets interest under this bill and that does not exist

under Illinois law oe

PRESIDING OFFICER: (SENATOR BRUCE)

Senator Kenneth Hall.

SENATOR HALL:

Well, I’m not — for the interest. I'm just asking

for ... that they could use portions of it. Okay. I see where

your bill differs.

PRESIDING OFFICER: (SENATOR BRUCE)

Further discussion? Senator Bowers

may close.

SENATOR BOWERS:

Well, I just want to comment to Senator Berning and

others that... the Illinois system ... has been... very seriously

criticized by the Supreme Court. Even the majority. Now,

Justice Blackman, and this was a split decision, . . . Justice

Blackman joined the majority and he commented that IIlinois

may have little reason to be proud of the system and he ex-

pressed a quote, “forlorn hope” that Illinois procedure

will be improved so that uncomfortable and distressing

litigation like this need not be pursued. I might also

add and this is quoted in the Tribune editorial] that I passed out

to you, that Justice John Paul Stevens and the Tribune

rightfully points out he’s from .. . practiced law in Chicago

for a number of years, he understands the — and he

dissented in this and said, “year after year k County

requires the woman to pay a tax that is three times as

$0 99 IH HH GO FO

21.

eam at

App. 75

STATE OF ILLINOIS

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STATE SENATE

TRANSCRIPTION DEBATE

Page 209 - May 27, 1981

great as the amount actually due and then after a two year

delay the county refunds the overassessment without interest.”

So, that all we're asking for is fair equity for the tax-

payer. In other words, if the taxpayer wins, it was his money

all along and he ought to have interest for the period of

time the government has kept and used his money. I, there-

fore, ask for a favorable roll call.

PRESIDING OFFICER: (SENATOR BRUCE)

The question is, shall Senate Bill 957 pass. Those

in favor vote Aye. Those opposed vote Nay. The voting

is open. Have all voted who wish? Have all voted who wish?

Have all voted who wish? Take the record. On that question,

the Ayes are 39, the Nays are 8, 1 Voting Present. Senate

Bill 957 having received a constitutional majority is de-

clared passed. 960, Senator Gitz. For what purpose does

Senator Collins arise?

SENATOR COLLINS:

A point of personal privilege.

PRESIDING OFFICER: (SENATOR BRUCE)

State your point.

SENATOR COLLINS:

In the President's gallery we are honored today with

two senior citizens that | feel have made some of the most

outstanding contributions in the State. And, as a matter

of fact, one of the persons throughout the country in the area of

youth .. . programs for youth and also programs for senior

citizens and programs in the whole area and the struggle of

es rights. And that is the Reverend Carter and Mrs.

a Day. Two ay 7 I think, that have played a very

— ant role in my life because I met both of them

n 1 was about the age of seventeen on the west side of

agg a I got involved in my first community activity with

ay under the Lawndale Youth Commission and they’re in

App. 76

STATE OF ILLINOIS

82ND GENERAL ASSEMBLY

HOUSE OF REPRESENTATIVES

TRANSCRIPTION DEBATE

62nd Legislative Day June 12, 1981

Terzich has requested him to handle this and the

Chair will honor that. Senate Bill 794.”

Clerk Leone: “Senate Bill 794, a Bill for an Act to

amend an Act in relationship to campaign financial

disclosure. Second Reading of the Bill. No Com-

mittee Amendments.”

Speaker Peters: “Third Reading. Any Amendments

from the floor?”

Clerk Leone: “No Floor Amendments.”

Speaker Peters: “Third Reading. Senate Bill 827,

Representative McGrew? Is the Gentleman on the

floor? Out of the record. Senate Bill 836, Represen-

tative Findley. Out of the record. Senate Bill 911,

Representative Hastert? Read the Bill, Mr. Clerk.”

Clerk Leone: “Senate Bill 911, a Bill for an Act to

amend the Uniform Hazardous Substances Act of I]-

linois. Second Reading of the Bill. No Committee

Amendments.”

Speaker Peters: “Any Amendments from the floor?”

Clerk Leone: “None.”

Speaker Peters: “Third Reading. Senate Bill 922,

Representative Bullock? Out of the record. Senate

Bill 925, Representative Bullock. Out of the record.

Senate Bill 958, Representative Swanstrom. Read

the Bill, Mr. Clerk.”

Clerk Leone: “Senate Bill 953, a Bill for an Act in

relationship to lease (sic, release) of tax .. . State Tax

Liens. Second Reading of the Bill. No Committee

Amendments.”

Speaker Peters: “Any Amendments from the floor?”

App. 77

STATE OF ILLINOIS

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62nd Legislative Day June 12, 1981

Clerk Leone: “None.”

Speaker Peters: “Third Reading. Senate Bill 957,

Representative Daniels? Read the Bill, Mr. Clerk.”

Clerk Leone: “Senate Bill 957...”

Speaker Peters: “Hold on a second. Representative

Daniels? 957? Read the Bill.”

Clerk Leone: “Senate Bill 957, a Bill for an Act to

amend the Revenue Act. Second Reading of the Bill.

Amendment #1 was adopted in Committee.”

Speaker Peters: “Any Motions with respect to Amend-

ment #1?”

Clerk Leone: “No Motions filed.”

Speaker Peters: “Any Amendments from the floor?”

Clerk Leone: “No Floor Amendments.”

Speaker Peters: “Third Reading. Senate Bill 989,

Representative Stewart? Is the Lady in the

chamber? Representative Stewart? Read the Bill,

Mr. Clerk.”

Clerk Leone: “Senate Bill 989, a Bill for an Act to

amend an Act to provide for the manner of propos-

ing Amendments to the Constitution and submitting

the same to the electors of the state. Second Reading

of the Bill. No Committee Amendments.”

Speaker Peters: “Any Amendments from the floor?”

Clerk Leone: “None.”

Speaker Peters: “Third Reading. Senate Bill 992,

Representative Miller? Out of the record. Senate Bill

1007, Representative Piel. Out of the record.

Representative Bullock, do you want to go back and

App. 78

STATE OF ILLINOIS

82ND GENERAL ASSEMBLY

HOUSE OF REPRESENTATIVES

TRANSCRIPTION DEBATE

62nd Legislative Day June 12, 1981

pick your Bills up? Happy to accommodate you, Sir.

At the bottom of page nine, Senate Bill 922.

Representative Bullock.”

Clerk Leone: “Senate Bill 922, a Bill for an Act to create

a statewide Nursing Education Commission. Second

Reading of the Bill. No Committee Amendments.”

Speaker Peters: “Any Amendments from the floor?”

Clerk Leone: “None.”

Speaker Peters: “Third Reading. Senate Bill 925,

Representative Bullock. Read the Bill, Mr. Clerk.”

Clerk Leone: “Senate Bill 925, a Bill for an Act to

amend the Health Service Education grants. Second

Reading of the Bill. No Committee Amendments.”

Speaker Peters: “Any Amendments from the floor?”

Clerk Leone: “None.”

App. 79

STATE OF ILLINOIS

82ND GENERAL ASSEMBLY

HOUSE OF REPRESENTATIVES

TRANSCRIPTION DEBATE

72nd Legislative Day June 26, 1981

Have all those voted who wish? Have all those voted

who wish? Mr. Clerk, take the record. On this ques-

tion, this Bill receiving 149 ‘yeas’, nine ‘nos’, none

voting ‘present’, receiving the Constitutional majori-

ty, this Bill shall be declared passed. Senate Bill 957,

Representative Daniels. Representative Zito.

Representative Zito please.”

Zito: “Yes, Mr. Speaker. Will the clerk read the Bill?”

Speaker Conti: “The Clerk read the Bill.”

Clerk O’Brien: “Senate Bill 957, a Bill for an Act to

a of the Revenue Act, Third Reading

of t ill.”

Speaker Conti: “Representative Zito.”

Zito: “Thank you, Mr. Speaker and Ladies and

Gentlemen of the House. Senate Bill 957 amends the

Revenue Act to provide the taxpayer who has paid

his taxes under protest an opportunity to obtain in-

terest which has accumulated on these protest... on

these protested taxes during the pendency of the

protest if the court rules in the taxpayer's favor. This

Bill requires that the collector deposit taxes paid un-

der protest in interest bearing accounts. Also, if the

court orders payments to the taxpayer of all or part

of the taxes paid under protest and withheld, then

the taxpayer shall also receive a proportional share

of interest earned during the pendency of the

protest. Finally, if the court order results in pay-

ment to the taxing district, an interest earned dur-

ing the pendency of the protest shal! be paid into the

county treasury. | would move for its adoption.

Would be happy to answer any questions at this

time, Mr. Speaker.”

App. 80

STATE OF ILLINOIS

82ND GENERAL ASSEMBLY

HOUSE OF REPRESENTATIVES

TRANSCRIPTION DEBATE

72nd Legislative Day June 26, 1981

Speaker Conti: “The Gentleman from Cook, Mr.

Preston.”

Preston: “Thank you, Mr. Speaker. Will the Gentleman

yield for a question?”

Speaker Conti: “He indicates he will.”

Preston: “Representative Zito, then this Bill is a good

Bill for consumers, for homeowners who might

protest their tax bills?”

Zito: “I think it is an excellent Bill for consumic .

Preston: “I see, so the consumer who would get sume in-

terest on the money he has paid in as being held by

the assessor or the county collector.”

Zito: “That is correct.”

Preston: “I see. | think it is a terrific Bill, Mr. Speaker,

and I would urge an ‘aye’ vote.”

Speaker Conti: “There being no further discussion, the

question is ‘Shall Senate Bill 957 pass?’ All those in

favor signify by voting ‘aye’, those o — voting

‘no’. Have all those voted who wish? Will the Clerk

take the record? On this question there are 145...4

voting ‘yes’, six voting ‘no’, three voting ‘present’.

This Bill receiving the Constitutional Majority is

hereby declared passed. We’ll now consider Senate

Bills 168 and Senate Bills 1081 — > un-

employment comp .. . insurance. Senate Bill 168,

en Deuster. Mr. Kane, Representative

_

Kane: “I realize that the Speaker has comme Se

that the Speaker can do this and sort of arbitrarily

skip around the Calendar and pick out Bills under

’

App. 81

STATE OF ILLINOIS

82ND GENERAL ASSEMBLY

HOUSE OF REPRESENTATIVES

TRANSCRIPTION DEBATE

72nd Legislative Day June 26, 1981

particular subject matters. And what I was wonder-

ing is since you have said that you have this power

even though the rules don’t give it to you, whether

you would give us some advance notice of the general

subject matters that you're going to to in the

order in which you're going to go to them so that

we're not sort of left here in the dark and blind-

sighted. 1 think the whole idea of the rule is that we

know in advance where your going to, either you're

going to go numerically or by priority of call. And

since you have decided that

$0 G0 NO & COS

App. 82

STATE OF ILLINOIS

82ND GENERAL ASSEMBLY

STATE SENATE

TRANSCRIPTION DEBATE

Page 213 - June 29, 1981

I'm sure that will be determined by the copy of the roll

call that'll you pass out to your constituents. Senate Bill

929, Senator Berning. Mr. Secretary.

SECRETARY:

Senate Bill 929 with House Amendment No. 1.

PRESIDING OFFICER: (SENATOR SAVICKAS)

Senator Berning.

SENATOR BERNING:

This . . . I move to nonconcur, Mr. President.

PRESIDING OFFICER: (SENATOR SAVICKAS)

Senator org moves to nonconcur in House Amendment

No. 1 to Senate Bill 929. Those in favor indicate by saying Aye.

Those op . The Ayes carry . . . have it. The motion carries

and the Secretary shall so inform the House. Senate Bill 930,

Senator Berning. Mr. Secretary.

SECRETARY:

Senate Bill 930 with House Amendment No. 1.

PRESIDING OFFICER: (SENATOR SAVICKAS)

Senator Berning.

SENATOR BERNING:

Thank you. Senate Bill 930 with the House amendment brings

these three systems into compliance with the Federal Age

Discrimination and Employment Act and I move for a con-

currence.

PRESIDING OFFICER: (SENATOR SAVICKAS)

Is there any discussion? If not, the question is, shall the Senate

concur in House Amendment No. 1 to Senate Bill 930.

. Those in favor will vote Aye. Those opposed vote Nay. The

voting is open. Have all voted who wish? Have all voted who

wish? Take . . . have all voted who wish? Take the record. On

. that question, the Ayes are 54, the Nays are none, none Voting

Present. The Senate does concur in House Amendment No. 1 to

Senate Bill 930, and the bill having received the constitutional

majority is declared passed. Senate Bill 957, Senator Bowers.

Mr. Secretary.

$2 90 NID Or CON

App. 83

STATE OF ILLINOIS

82ND GENERAL ASSEMBLY

STATE SENATE

TRANSCRIPTION DEBATE

Page 214 - June 29, 1981

SECRETARY:

Senate Bill 957 with House Amendment No. 1.

PRESIDING OFFICER: (SENATOR SAVICKAS)

Senator Bowers.

SENATOR BOWERS:

Thank you, Mr. President. House Amendment No. 1 to Senate

Bill 957 merely brought another section of the Statute that was

in conflict with the bill, as passed, into line and provided

for the ... for the .. . deposit of monies in interest bearing

accounts paid to the Corporate Fund of the depositor except

. where this bill applied and I would move adoption ... or con-

currence in House Amendment No. 1.

PRESIDING OFFICER: (SENATOR SAVICKAS)

Is there any discussion? Senator Berman.

SENATOR BERMAN:

Well, my concern addresses not only the amendment but the

original bill. It appears here that the .. . this bill would...

let me start with a question of the sponsor. Under this bill

and the amendment, am I correct that the current law would be

changed so that all monies paid under protest would have to be

set aside and could not be released at all to the... . taxing

bodies?

PRESIDING OFFICER: (SENATOR SAVICKAS)

Senator Bowers.

SENATOR BOWERS:

I think that’s true under the present law. There is a

bill floating around here to change that. I’m not sure what

happened to it, but under the present law, I think, that’s

required.

PRESIDING OFFICER: (SENATOR SAVICKAS)

Senator Berman.

SENATOR BERMAN:

Well, my. . .my information was to thecontrary. That. . . when

$9 90 NI Or C9 NO

App. 84

STATE OF ILLINOIS

82ND GENERAL ASSEMBLY

STATE SENATE

TRANSCRIPTION DEBATE

Page 215 - June 29, 1981

you pay under protest . . . only a portion of that fund must be

retained and the majority . . . the great majority of it is, in

fact, released to the taxing bodies. I think that question is

crucial because that’s .. . that is where the impact of this bill

would be. Let me go further and explain that it’s my under-

standing, as it’s explained to me, that all of the monies

under 957 .. . all monies paid under protest plus the interest

would have to be held by the Treasurer until the protest has

been determined by court. And if that’s what this bill

authorizes, contrary to existing laws, it could bring all of local

government to a screeching halt bya. ..a.. .a concerted ef-

fort to pay under protest. Could you. . . respond?

PRESIDING OFFICER: (SENATOR SAVICKAS)

Senator Bowers.

SENATOR BOWERS:

Well, if you'll . . . if you'll dig out the bill and take a

look at it, it says, no protest shall prevent or cause ... or be

a cause of delay in the distribution of tax collection among

the taxing bodies of any taxes collected which were not paid

under protest. The collector may withhold from distribution

the amounts paid under protest or one-half of the total taxes

collected, whichever is less. Then it goes on to say, that that

amount not distributed has to be put out at interest bearing

funds and if the county wins, the county gets the interest,

if the taxpayer wins, the taxpayer gets the interest. I don’t

think it effects it at all.

PRESIDING OFFICER: (SENATOR SAVICKAS)

Senator Berman.

SENATOR BERMAN:

The language you just read, is that existing law or is that

new law?

PRESIDING OFFICER: (SENATOR SAVICKAS)

Senator Bowers.

Ce ee eee See Soe 8 SS eee ee ee ee eS eee ee eee

App. 85

STATE OF ILLINOIS

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Page 216 - June 29, 1981

SENATOR BOWERS:

The language I just read is existing law from the bill.

If you need a copy of it, I'll send it over.

PRESIDING OFFICER: (SENATOR SAVICKAS)

Senator Berman.

SENATOR BERMAN:

What you've just read is existing law. So, that all we’re.. .

all that this bill, you’re saying, does is that it addresses the

question of interest on that setaside.

PRESIDING OFFICER: (SENATOR SAVICKAS)

Senator Netsch.

SENATOR NETSCH:

Let me. . .confirm this with Senator Bowers.1. . . the language

that you just read, most of which is existing law, .. .and then you

pick up your original amendment, such amounts paid under pro-

test and withheld from distribution shall be deposited in interest

bearing accounts and so forth. I don’t, at the moment, have in

front of me the text of the House amendment, which I know was

primarily a clarifying and technical amendment. Has that been

changed in that respect?

PRESIDING OFFICER: (SENATOR SAVICKAS)

Senator Bowers.

SENATOR BOWERS:

No. It... it amends a different section of the Statute,

which provided . . . that all earnings accruing on investments. . .

shall be paid into the Corporate Fund and then it says, except

as provided in Section 194. In other words, it was a clarifying

section . . . amendment to another section of the Statute.

PRESIDING OFFICER: (SENATOR SAVICKAS)

Senator Netsch.

SENATOR NETSCH:

Thank you, Mr. President. I think then, Senator Berman,

that Senator Bowers is quite correct. It does not, in any way,

SO 90 IS? OV CO HS P*

App. 86

STATE OF ILLINOIS

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Page 217 - June 29, 1981

change the existing provisions. It simply says that that money,

. . Which is allowed to be withheld, will be put in interest

bearing accounts and if the taxpayer wins, the taxpayer will be

entitled to the . . . to the interest. That .. . this is something

that was called to our attention by a United States Supreme

Court decision, which very correctly pointed out that the system

in Illinois, although not a violation of the Constitution, was

unconscionabie. Senator Bowers’ bill responded to that. If

he hadn’t done it, I would have. It’s a very good bill and I

hope that his concurrence will be accepted.

PRESIDING OFFICER: (SENATOR BRUCE)

Further discussion? Senator Savickas.

SENATOR SAVICKAS:

Well, Mr. President, I, too, . . . rise on Senator Berman’s

concern. 1...I1 think ...I1 can’t see how it doesn’t cost a

county or a municipality money. When you're withholding and

paying under protest. . . you’re going to. . . I can’t see why people

would. . . be willing to pay their taxes. . . not under protest when

they have a chance of making the money and putting it in. . . in-

terest bearing accounts for this. I could. . . visionin Chicagoin. . .

Cook County that. . .some of these consumer groups. . . would use

this just as an issue to. . . organize whole communities not to pay

their taxes in protest and ... tie up the whole system. We have

... groups that. ..constantly. . .solicit membership just through

confrontation on some particular issue and this is a very emotional

issue .. . to go out to a group of a hundred, two hundred people

and say, well, fine, let’s withhold all our taxes. You're going to

get interest on it, so don’t worry about paying it. We'll pay i

under protest and .. . if by luck you win, you get interest. It’s

terrific idea. And I could see havoc being created in. .. someo

these big communities.

PRESIDING OFFICER: (SENATOR BRUCE)

Senator Netsch.

wes err a errr ee fT Cae Toe ee ee eee res

App. 87

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Page 218 - June 29, 1981

SENATOR NETSCH:

Well, ... it probably . . . for the second time, I realize. It

probably is not my role to respond to that, but that was a

question that was discussed at length in committee and I think

when the bill first passed on the Floor. The point is, that if

their protest is not a valid one, they aren’t going to get the

interest. So, it’s going to have to be a legitimate . . . objection

to the tax in the first place. And I think that reason alone is go-

ing to prevent any of the kind of mass. . . withholding of taxes

or paying of the taxes under protest that you talk about. This

is designed just for the .. . the poor bloke who pays his taxes

under a genuine protest or . . . or objection to the basis on

which it is being imposed, has to wait maybe two years or more

before the issue is finally resolved and then if he wins, when

he wins, is told, well, you can have back .. . the tax, but you

can’t have any interest on it. In the meantime, somebody else

has been earning the interest on his money, which a court has

now held was his all along. And. . . it isan absolutely unconscion-

able ... procedure that we have in the State of Illinois. It just

barely survived a Supreme Court attack on constitutional grounds

As | recall, the decision was 5 to 4 and it was the Justice from

the State of Illinois, Justice Stevens, who pointed out that

while he was not going to vote to invalidate the system,...

Illinois really ought to get its house in order in this respect.

So, it seems to me this is absolutely right from the taxpayers’

int of view and the danger is just simply not there.

RESIDING OFFICER: (SENATOR BRUCE)

Further discussion? Further discussion? Senator Bowers

may close.

SENATOR BOWERS:

Well, Mr. President, I don’t know what | can add that Senator

Netsch hasn't already said. It’s an unconscionable situation where

the taxing body can go in and tax at any rate, keep the money for

App. 88

STATE OF ILLINOIS

82ND GENERAL ASSEMBLY

STATE SENATE

TRANSCRIPTION DEBATE

Page 219 - June 29, 1981

two years and then say, oh, I’m sorry, we made a mistake, here’s

your money back, but we’re not going to give you any interest on

it. That’s exactly what the Supreme Court said, that the Chicago

Press had editorialized on this subject a number of times. It’s

. . . it’s a totally unconscionable situation and I would... urgea

favorable roll call.

PRESIDING OFFICER: (Senator Bruce)

The question is, shall the Senate concur in House Amendment

No. 1 to Senate Bill 957. Those in favor vote Aye. Those opposed

10. vote Nay. The voting is open. Have all voted who wish? Have all

11. voted who wish? Have all voted who wish? Have all voted who wish?

12. Take the record. On that question, the Ayes are 35, the Nays are

13. 17, none Voting Present. The Senate does concur with Senate...

14. House Amendment No. 1 to Senate Bill 957, and the bill having

15. received the required constitutional majority is declared passed.

16. For what purpose does Senator Totten arise?

17. SENATOR TOTTEN:

18. Before that scoreboard, Mr. President, gets down to zero,

19. could we know what the countdown is for?

20. PRESIDING OFFICER: (SENATOR BRUCE)

a. Oh, yes...yes...

22. SENATOR TOTTEN:

23. Five, four, three...

24. PRESIDING OFFICER: (SENATOR BRUCE)

25. ... now, wait a minute. If you... alright. No, the. .. the

26. scoreboard ... if I might have the attention of the Body, the

27. scoreboard was wired in its original . . . scheme of things to

28. have a... automatic take the record. So, we can set it for any

29. time up to sixty seconds and .. . if you wish, it locks the board

30

3

GON MOS Choe

. automatically. So, ... so, .. . so, it has been the decision of the

1. Body that we not utilize that because sometime. . . alright. . . al-

32. right. Wait a minute... wait a minute. Why don't we. . . right

33. ... for what purpose does Senator Walsh arise?

aes

App. 89

APPENDIX 10

CONSTITUTIONAL PROVISIONS

AND STATUTES

UNITED STATES CONSTITUTION

Amendment [V.]

No person shall be held to answer for a capital, or

otherwise infamous crime, unless on a presentment or in-

dictment of a Grand Jury, except in cases arising in the

land or naval forces, or in the Militia, when in actual ser-

vice in time of War or public danger; nor shall any per-

son be subject for the same offence to be twice put in

jeopardy of life or limb; nor shall be compelled in any

criminal case to be a witness against himself, nor be

deprived of life, liberty, or property, without due process

of law; nor shall private property be taken for public use,

without just compensation.

Amendment XIV.

Section 1. All persons born or naturalized in the Un-

ited States, and subject to the jurisdiction thereof, are

citizens of the United States and of the State wherein

they reside. No State shall make or enforce any law

which shall abridge the privileges or immunities of

citizens of the United States; nor shall any State deprive

any person of life, liberty, or property, without due

process of law; nor deny to any person within its jurisdic-

tion the equal protection of the laws.

UNITED STATES CODE, TITLE 42, SECTION 1983

§ 1983. Civil action for deprivation of rights

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

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

Territory or the District of Columbia, subjects, or causes

App. 90

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. For the purposes of this section,

any Act of Congress applicable exclusively to the District

of Columbia shall be considered to be a statute of the Dis-

trict of Columbia.

ILLINOIS REVISED STATUTES, 1979

Chapter 120, Paragraph 494 (Section 13 of the

Revenue Act of 1939, as amended)

494. Rules of assessing authorities

§ 13. The county assessor, board of appeals, board of

assessors and the boards of review shall make and

publish reasonable and proper rules for the guidance of

persons doing business with them and for the orderly dis-

patch of business.

In counties containing 1,000,000 or more inhabitants,

the county assessor and board of appeals, jointly shall

make and prescribe rules and regulations for the assess-

ment of property and the preparation of the assessment

books by the township assessors in their respective towns

and for the return of such assessment books to the county

assessor.

Wherever, in this Act, the board of assessors or the

board of review is authorized to act, such action may be

taken by a majority of said respective boards.

Chapter 120, Paragraph 594 (Section 113 of the

Revenue Act of 1939, as amended)

594. Powers and duties of board of appeals

§ 113. In counties containing 1,000,000 or more in-

habitants, the board of appeals in any year shall

(1) On complaint that any property is over assessed or

under assessed, or is exempt, review and order such

assessment corrected;

App. 91

(2) Order the county assessor to correct any mistake

or error (other than mistakes or errors of judgment as to

the valuation of any real or personal property) in the

manner provided in Sections 122 and 124 of this Act; and

(3) Direct the county assessor, when he fails to do so

on his own initiative, to assess all property subject to

assessment which he has not assessed for any reason and

enter the same upon the assessment books and to list and

assess all property, real or personal, that has been

omitted in the assessment of any year or number of years,

or if the tax thereon, for which such property was liable

for any cause, has not been paid or if any such property,

by reason of defective description or assessment thereof,

fails to pay taxes for any year or years, in either case the

same, when discovered by the board shall be listed and

assessed by the county assessor and the board may order

the county assessor to make such alterations in the

description of real or personal property as it deems

necessary. No such charge for tax of previous years shall

be made against any real property if (a) the real property

was last assessed as unimproved, (b) the owner of such

property gave notice of subsequent improvements and re-

quested a reassessment as required by Section 27a of this

Act, and (c) reassessment of the real property was not

made within the 16 month period immediately following

the receipt of that notice.

The board of appeals shall hear complaints and revise

assessments of any particular parcel of real property or

the assessment of personal property of any person or cor-

poration mentioned or described in a complaint filed with

the board and conforming to the requirements of Section

117 of the Act and shall made revisions in no other cases.

Chapter 120, Paragraph 673(a) (Section 192a of the

Revenue Act of 1939, as amended)

673a. Proceeds of taxes—Investment

§ 192(a). The county collector shal! as provided in Sec-

tion 2 of “An Act relating to certain investments of public

funds by public agencies”, approved July 23, 1943, as

App. 92

amended, invest and reinvest the proceeds of any taxes

paid under protest as provided in Section 194 or 195 in

obligations of the United States Government maturing

not more than 91 days after the date of purchase or may

deposit such funds in savings accounts, including cer-

tificates of deposit, investment certificates or time

deposit open accounts, in banks or savings and loan

associations insured by the United States or other federal

agency. No more than the amount so insured shall be

held in any bank or savings and loan association savings

account. Investments made in obligations of the United

States Government shall be at the then existing market

price and in any event not to exceed par plus accrued in-

terest. The cost price of such obligations and all savings

accounts in banks or savings and loan associations shall

be considered as cash in the custody of the county collec-

tor and shall be conveyed as cash by the county collector

to his successor. All earnings accruing on any such in-

vestment or bank or savings and loan association savings

account shal! be credited to and paid into the county cor-

porate fund.

Chapter 120, Paragraph 675 (Section 194 of the

Revenue Act of 1939, as amended)

675. Payment of taxes—Payments under protest

§ 194. Except as otherwise provided in Section 224.1

of this Act, current taxes on real property shall be

payable in 2 equal installments. The collector, when so

requested by the party paying the taxes, shall receive and

receipt for such taxes in installments. The collector shall

receive taxes on part of any lot, piece or parcel of land

charged with taxes when a particular specification of the

part is furnished. If the tax on the remainder of such lot

or parcel of land remains unpaid, the collector shall enter

such specification in his return, so that the part on which

the tax remains unpaid may be clearly known. The tax

may be paid on an undivided share of real estate. In such

case the collector shall designate on his record upon

whose undivided share the tax has been paid.

App. 93

If any person desires to object pursuant to Section 235

of this Act to all or any part of a real property tax for any

year, for any reason other than that the real estate is not

subect to taxation, he shall pay the tax installments as

they become due, and each installment payment shall be

a by a writing, substantially in the follow-

ing form:

Payment under protest.

_ & me Item No. ...... (as the same appear on

the General Tax Bill). Original amount of tax $...........

Amount of payment $........... This payment shall be

applied to the taxes of all taxing bodies ratably, subject

to refund of ...... % of the tax, which is objected to on the

ground (here set forth ground of objection) and is, ac-

cordingly, made under protest.

Name of taxpayer ..........

RGETOEB 20.00.00:

The person protesting shall present to the collector 2

copies of the written protest signed by himself. The

collector shall write or stamp the date of receiving the

same upon the copies, and sign the same, one of which

copies he shall retain and the other he shall deliver to the

person making the payment under protest.

In counties having 1,000,000 or more inhabitants, and

in other counties which have adopted the method provid-

ed for in Section 224.1, any such written protest, whether

of all or any part of a real property tax, shall be

presented to the Collector at the time of payment of the

second installment of said tax and at no other time.

The person paying real estate taxes under protest shall

appear in the next application for judgment and order of

sale and object to the taxes in relation to which the

protest is made, and upon his failure so to do, the protest

shall be waived, and judgment and order of sale entered

for any unpaid balance of such taxes.

When any such objection is filed in a county of fewer

than 1,000,000 inhabitants, there shall also be filed a

App. 94

duplicate copy for the use of the State’s Attorney and a

triplicate copy for the use of the county clerk of such

county. Any such objection or amendment thereto filed in

a county of fewer than 1,000,000 inhabitants shall contain

on the first page thereof a listing of the tax levying units

against which the objection is directed. Within 10 days

thereafter the clerk of the circuit court shall deliver one

copy to the State’s Attorney and one copy to the county

clerk, taking their receipts therefor. The county clerk

shall, within 30 days from the last day for the filing of ob-

jections, notify the duly elected or appointed custodian of

funds for each tax levying unit, whose tax monies may be

affected by such objection, that such objection has been

filed. Any amendment filed to such objection, except any

amendment per

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