Appendix — Lehnhausen v. Lake Shore Auto Parts Co.

6

ORDER OF CIRCUIT JUDGE DAHL

Lake Shore Auto Parts Co. v. Korzen, et al., Case Num-

ber 70 CH 5123 (March 30,1971),

This cause coming on to be heard upon the Motion for

Summary Judgment of LAKE SHORE AUTO PARTS

- CO., an Illinois corporation, plaintiff, by and through its

‘attorneys, ORLIKOFF, PRINS, FLAMM & SUSMAN,

and upon the Cross-motion For Summary Judgment of

defendant ROBERT J. LEHNHAUSEN, Director, Depart-

ment of Local Government Affairs of the State of IIli-

nois, by and through the Attorney General of Illinois, and

the Cross-motion For Summary Judgment of defendants

KORZEN, KEANE, SEMROW, CULLERTON and BAR-

RETT, assessing and taxing officials of Cook County, by

and through the State’s Attorney of Cook County,

The Court having examined the pleadings and memo-

randa filed by the parties hereto, having heard the argu-

ments of counsel and being fully advised in the premises

DOES HEREBY FIND:

1. That there is no genuine issue as to any material fact

in this cause, and it is therefore appropriate and proper

that the cause be determined on the Motion and Cross-

motions For. Summary Judgment.

2. That the plaintiff, LAKE SHORE AUTO PARTS

CO., is a corporation duly organized and existing under the

laws of Illinois, and on April 1, 1970, was the owner of

personal property having a taxable situs in the County of

Cook, which property has been included on the assessment

role now being prepared by the assessing officials of Cook

County for the tax year 1970; that the plaintiff has stand-

ing to bring this action on its own behalf, and it is not

at this time necessary or appropriate to determine whether

the action is properly brought and maintained as a class

action or to determine the definition of the plaintiff class.

7

3. That an amendment to the Illinois Constitution of

1870, designated as Article [X-A, was approved by the

people of Illinois at a referendum held on November 7,

1970, and such amendment, by its terms, became effective

January 1, 1971; that said Article [IX-A purports to pro-

hibit the taxation of personal property by valuation as

to ‘‘individuals’’, and only as to ‘‘individuals’’, while leav-

ing unaffected those provisions of the Illinois Constitu-

tion and the Revenue Act of Illinois (Ill. Rev. Stat. 1969,

ch. 120, §482 et seq.) which impose such personal prop-

erty taxes as to property owned by corporations and other

‘*non-individuals’’.

4. That said Article IX-A is self-executing, and the

necessary effect of the adoption thereof is to amend the

various provisions of the Revenue Act of Illinois, specifi-

cally including but not limited to §18 thereof (Ill. Rev.

Stat. 1969, ch. 120, §499), so as to exempt from personal

property taxes thereby imposed all personal property

owned by ‘‘individuals’’, while retaining such taxes as to

personal property owned by corporations and other ‘‘non-

individuals.’’

5. That the Revenue Act of Illinois, as so amended by

Article I[X-A of the Illinois Constitution, deprives the

plaintiff corporation of the equal protection of the laws

guaranteed by the Fourteenth Amendment to the Consti-

tution of the United States: that said Revenue Act of

Illinois, to the extent that it purports to impose personal

property taxes with respect to the property owned by

plaintiff, is therefore unconstitutional, void and of no effect

whatsoever.

6. That Article [X-A of the Illinois Constitution is not

applicable with respect to personal property taxes imposed

by the Revenue Act of Illinois for the year 1970, the as-

Lig OO PO ee

10

ORDER OF CIRCUIT JUDGE THOMAS DONOVAN

Shapiro, et al v. Barrett, et al., Case Number 71 L 5745

(May 27, 1971).

This cause appears before this Court on plaintiffs’ Com-

plaint for Declaratory Judgment, filed pursuant to Chap-

ter 110, Section 57.1 of the Civil Practice Act. The action

was filed by plaintiffs for themselves and in a represent-

ative capacity on behalf of all other persons similarly

situated. The cause comes on for hearing on separate

motions, to strike and dismiss that complaint, filed by

County and State defendants. Defendants have. elected to

stand on their motions.

No genuine issue as to any material fact emerges.

The plaintiffs are:

1. Clemens K. Shapiro, is a natural person, citizen and

taxpayer of the State of Illinois, resident of and a

salaried employee in the County of Cook wherein he

owns personal property in his own name, and owns

real property jointly with his wife, none of which

property is owned or used in the operation of, or for

purposes of business, and all of which property is

owned and used for his personal enjoyment and that

of his family.

2. Jerome Herman, is a natural person, and a citizen of

the State of Illinois, and as sole proprietor owns, op-

erates and conducts a business located in Cook County,

Illinois, and is the owner of property and a taxpayer —

herein.

3. Guy S. Ross and Eugene D. Ross, natural persons,

citizens and residents of the State of Illinois, both

11

of whom are partners, and as partners operate and

conduct a business as a partnership duly organized

under the laws of the State of Illinois, which busi-

ness entity is located in the County of Cook and is

the owner of property and a taxpayer therein.

4. M. Weil and Sons, Inc., a corporation duly organized

and existing under the laws of the State of Illinois, is

located in, and is the owner of property situated in the

County of Cook and a taxpayer therein.

Each of the plaintiffs is an owner of property subject

to the ad valorem tax directed to be imposed by Article

IX of the Illinois Constitution of 1870, and imposed by the

Illinois Revenue Act of 1939, which property has been

assessed by valuation and continues to be so assessed. by

defendants pursuant to that constitutional and statutory

authority.

The electorate of this State, on November 3, 1970, adopted

amending Article IX-A to the Illinois Constitution of 1870.

This amendment became part of the Illinois Constitution

on November 25, 1970, and reads as follows:

12

‘* Article IX-A

- TAXATION OF PROPERTY

§1. Taxation of personal property prohibited

Section 1. Notwithstanding any other provision of

this Constitution, the taxation of personal property

by valuation is prohibited as to individuals.’’

‘“‘SCHEDULE

‘‘Paragraph 1. This amendment shall become effec-

tive January 1, 1971.’’

Plaintiffs contend as follows:

All plaintiffs ‘contend that Illinois Constitution of 1870,

as amended by the addition of Article IX-A, specifically

prohibits, and declares to be unconstitutional the impo-

sition, in Dlinois, of the property taxes imposed by Ar-

ticle IX, Section 1, on all forms of property, real and

personal or other, regardless of the ownership of that

property or the use to which that property is put by its

owner.

All plaintiffs contend that if Article IX-A does not pro-

hibit the taxation of all property, then Article [IX-A pro- |

hibits the tax to be measured by the value of the property

taxed.

13

All plaintiffs contend that the prohibition of Article

IX-A, which abolishes the imposition of property tax meas-

ured by valuation of the property taxes, extends to those

taxes so measured where the assessment of plaintiffs’ prop-

erty has been commenced by defendants prior to, even

though not completed on January 1, 1971, the effective. date

of Article IX-A, and payment due thereafter.

Natural Persons contend that:

The designation ‘‘individuals’’ in Article [X-A prop-

erly and validly describes, is intended to apply, and does

apply solely to them; and the taxation by valuation pro-

hibited in Article [X-A, if not applicable to all property

owned by them, is applicable to personal property owned

by them and used by them for their personal purposes;

and that,

Article IX-A prohibits taxation, by valuation of per-

sonal property as to them alone, while denying that pro-

hibition as to all others, is proper, valid, and constitu-

tional under both Illinois Constitution and the Constitu-

tion of the United States.

Both business entities and corporations contend that:

‘ Article [X-A, effective January 1, 1971, as an amend-

ment to Illinois oCnstitution of 1870 is offensive to the

Constitution of the United States.

14

_ If the designation. ‘‘individuals’’ in Article [X-A in-

vokes prohibition of taxes by valuation on personal prop-

erty exclusively as to ‘‘natural persons’’ and personal

property owned by them, but denies the same prohibition

to business entities and corporations, then such classifi-

cation is discriminatory, unreasonable and offensive both

to Illinois Constitution and the Constitution of the United

States. This is true for the reasons that such classifica-

tion is invalidly predicated upon purported differences be-

tween users of identical property and the use to which

that property is put, instead of differences found to exist

between the forms of the property upon which that tax is

directly laid. The employment of such base constitutes spe-

cial legislation prohibited by Article IV, Section 22 of IIli-

nois Constitution, as well as denying to business entities

and corporations due process of law and the equal pro-

tection of the law guaranteed to them by Article II, Sec-

tion 2 of the Illinois Constitution, and the Fourteenth

Amendment to the Constitution of the United States.

Unless the exclusion of property owned by ‘‘individuals’’

is construed to exclude the property of business entities

and corporations, as well as that of natural persons, then

the employment in Article [X-A of the term ‘‘individuals’’

is so vague, uncertain, and incapable of definitive applica-

tion to the context of Article IX, that Article [IX-A must

fall because it is totally absent the comprehension required,

especially of constitutional provisions, by both Illinois Con-

stitution and the Constitution of the United States.

Business entities contend that:

(a) The designation ‘‘individuals’’ in Article [X-A is

correctly and properly described, and is intended to apply

to, and does include business entities which own property

because the natural person owners of that business en-

15

tity are personally and individually liable for the pay-

ment of that tax.

Article IX-A prohibiting taxation by valuation of prop-

erty owned by such business entities, while denying that

prohibition as to corporations is proper, valid and consti-

tutional under both Illinois’ Constitution and the Consti-

tution of the United States.

Corporations contend that:

If the designation ‘‘individuals’”’ in Article [IX-A applies

to any or all owners of property except corporate owners

of property, then such classification is discriminatory, un-

reasonable, and offensive to both the Illinois Constitution

and the Constitution of the United States.

Defendants contend that the taxation by valuation of

real property and other property, as provided in Article

IX shall continue and remain, in all regards, unaffected

by Article IX-A; however:

Notwithstanding any other provision of this Constitu-

tion, the taxation of personal property by valuation is

prohibited only as to natural persons; but as to them, only

as to the personal property owned by them; but as to that

personal property owned by them, only such of that prop-

erty which is used by them for the personal enjoyment

of themselves and their families.

This matter appearing on the pleadings aforesaid, pre-

senting the issues to this Court as delineated by those

pleadings, and the Court having heard arguments by all

parties in support of their respective positions, THIS

COURT FINDS:

1. That a genuine cause and controversy exists, and that

this action is properly maintained under the provisions of

. 16

Chapter 110, Section 57.1 (Declaratory Judgments), Civil

Practice Act, Illinois Revised Statutes, 1969.

2. Each of these plaintiffs has standing to bring this

action in his or its own behalf and is a proper represent-

ative of his class.

3. That this action is properly maintained as a class

action, and the members of those classes are adequately

and competently represented by counsel herein.

4. That Article [X-A of the Illinois Constitution of 1870

is valid, constitutional and immune to all of the plaintiffs’

- assaults, both under the Illinois Constitution and the Con-_

stitution of the United States.

5. That Article [X-A is free of the ambiguity and un-

certainty of intendment charged by the plaintiffs, and that

its intendment is clearly declared to prohibit the taxa-

tion of personal property by valuation exclusively as to

natural persons, where that property is used, by them, for

the personal enjoyment of themselves and their families.

6. That these findings by this Court make it unneces-

sary to consider contentions made by plaintiffs in the

alternative.

7. That all issues as found heretofore are found in

favor of the defendants, except as to those issues relating

to the plaintiff Clemens K. Shapiro and members of his

class involving personal property owned and used by them

for the personal enjoyment of themselves and their families.

8. That motions to strike and dismiss plaintiffs’ Com-

plaint are sustained in regards and in respect of those

found in favor of the defendants, except as to those issues

raised by plaintiff Clemens K. Shapiro and members of

his class involving personal property owned and used by

17

them for the personal enjoyment of themselves and their

families.

9. Pursuant to Rule 304(a) of the Rules of the Supreme

Court of Illinois, the Court expressly finds that there is

no just reason for delaying enforcement or appeal of this

Order. In the event of an appeal from this Order, the

Court is of the opinion that the interests of justice would

be best served by hearing and deciding the appeal as

expeditiously as possible because of the manifest public

importance of the issues and the substantial amount of tax

revenues that are involved.

WHEREFORE, IT IS ORDERED, ADJUDGED and

DECREED that defendants’ motions to strike and dismiss

are sustained as to all plaintiffs, except the plaintiff

Clemens K. Shapiro and members of his class, and plain-

tiffs’ Complaint is stricken as to all issues and in all re-

gards and respects contrary to and in variance with the

judgment of this Court; that Amending Article IX-A of

the Illinois Constitution is valid and constitutional in all

respects and is immune to attack under any provision or

provisions of the Illinois Constitution of 1870 and the

United States Constitution, and that said Amending Article

IX-A declares its prohibition exclusively as to any per-

sonal property tax on the personal property owned by

individuals and used for their personal enjoyment and that

of their families.

ENTER:

THOMAS C. DONOVAN,

Presiding Judge, Tax Division,

Circuit Court of Cook County,

Illinois.

Date: May 27, 1971

18

OPINION OF THE SUPREME COURT OF ILLINOIS

(July 19, 1971)

LAKE SHORE AUTO PARTS CO.,}

an Illinois Corporation, et al.,

Appellees,

Vv.

BERNARD J. JORZEN, County

Treasurer and ex officio County Col-

lector -of Cook County, et al.,

Appellants.

EUGENE L. MAYNARD, et al.,

Plaintiffs,

v.

EDWARD J. BARRETT, County

Clerk of Cook County, et al.,

Defendants.

CLEMENS K. SHAPIRO, et al,

Appellants,

v.

EDWARD J. BARRETT, County

Clerk of Cook County, et al.,

Appellees. }

| Nos. 44199, 44308,

44432 Cons.

Mr. JUSTICE SCHAEFER delivered the opinion of

the court.

These consolidated cases present issues concerning the

construction and the validity of Article IX-A which was

added to the Constitution of 1870 by referendum vote at

the November 1970 election. On June 30, 1969, the Sen-

ate and the House of Representatives concurred in the

19

adoption of Senate Joint Resolution No. 30, which pro-

vided for the submission of the proposed amendment to

a referendum vote. Senate Joint Resolution No. 30 (Sen-

ate Journal, June 30, 1969, p. 3476) is as follows:

=

SENATE JOINT RESOLUTION NO. 30

Resolved, By the Senate of the Seventy-siath Gen-

eral Assembly of the State of Illinois, the House of

Representatives concurring herein, that there shall be

submitted to the electors of the State for adoption or

rejection at the next election of members of the Gen-

eral Assembly of the State of Illinois, in the manner

provided by law, a proposition to add Article IX-A

to the Constitution, the added Article to read as fol-

lows:

ARTICLE IX-A ee

Section 1. Notwithstanding any other provision of

this Constitution, the taxation of personal property by

valuation is prohibited as to individuals.

SCHEDULE

Paragraph 1. This amendment shall become effec-

tive January 1, 1971.

The explanation of the amendment which appeared upon

the referendum ballot is as follows:

‘‘The amendment would abolish the personal prop-

erty tax by valuation levied against individuals. It

would not affect the same tax levied against corpo-

rations and other entities not considered in law to

be individuals. The amendment would achieve this re-

sult by adding a new article to the Constitution of

1870, Article [X-A, thus setting aside existing provi-

sions in Article IX, Section 1, that require the taxa-

tion by valuation of all forms of property, real and

personal or other, owned by individuals and corpora-

tions.’’

Subsequently, on May 19, 1970, the Senate adopted Sen-

ate Joint Resolution No. 67 (Senate Journal May 19, 1970,

20

p. 6) which contained a further statement of the inten-

tion of the General Assembly in adopting Senate Joint

Resolution No. 30. Senate Joint Resolution No. 67 was

concurred in by the House of Representatives on May 29,

1970 (Senate Journal May 29, 1970, p. 149). It reads as

follows:

Senate Joint Resolution No. 67

RESOLVED, BY THE SENATE OF THE SEV-

ENTY-SIXTH GENERAL ASSEMBLY OF THE

STATE OF ILLINOIS, THE HOUSE OF REPRE-

SENTATIVES CONCURRING HEREIN, that, in

adopting Senate Joint Resolution No. 30, which sub-

mits to the electors of this State a constitutional amend-

ment prohibiting the taxation of personal property by

valuation as to individuals, it was the intention of this

General Assembly to abolish the ad valorem taxation

of personal property owned by a natural person or by

two or more natural persons, and that, by the use of

the phrase ‘‘as to individuals’’, this General Assembly

intended to mean a natural person, or two or more

natural persons as joint tenants or tenants in common.

The first of the three consolidated actions that are be-

fore us was filed by Lake Shore Auto Parts Co., a cor-

poration, on December 9, 1970. The complaint named as

defendants the county clerk of Cook County, the county

assessor, the county collector and the members of the

board of appeals of that county, as well as the director

of the Department of Local Government Affairs of the

State. It alleged that it was filed as a class action on

behalf of the plaintiff (hereafter Lake Shore) and on be-

half of all other corporations and other ‘‘non-individuals”’

subject to personal property tax. It asserted that the new

Article IX-A violates the fourteenth amendment to the

Constitution of the United States because its effect ‘‘is to

21

exonerate from ad valorem personal property taxation,

on and after January 1, 1971, all personal property owned

by ‘individuals’, while authorizing and requiring the con-

tinued ad valorem taxation of all personal property owned

by entities other than ‘individuals.’ ’’ It also alleged that

the provisions of Article [IX-A immediately became a part

of and amended the Revenue Act of 1939, so that that

’ statute ‘‘imposes ad valorem taxes only with respect to

personal property owned by corporations and other enti-

ties which are not ‘individuals’ within the meaning of said

Article [X-A.’’ The complaint prayed for a decree ‘‘find-

ing and declaring that the provisions of the Revenue Act

of 1939 * * *, as amended by Article IX-A of the Consti-

tution of Illinois, are unconstitutional, invalid and unen-

forceable insofar and to the extent that such statute pur-

ports to impose ad valorem taxes with respect to personal

property owned by plaintiff and all corporations and other

‘non-individuals’ who are members of the class which plain-

tiff represents.’’ An injunction, as well as relief appropri-

ate to a class action, was also sought.

The answers of the defendants denied the legal conclu-

sions asserted by the plaintiff. They did not admit the alle-

gations that related to the representative character of the

action, but they did not dispute any allegations of fact that

related to the basic issues.

All parties moved for summary judgment, and the trial

court entered an order on March 30, 1971, granting the

basic relief prayed for in the complaint, but reserving ju-

risdiction to determine the class aspect of the action. The

order also found that Article [X-A is not applicable to

personal property taxes, the assessment of which was

commenced prior to January 1, 1971. The defendant, Rob-

ert J. Lehnhausen, Director of the Department of Local

22

Government Affairs of the State of Illinois, has appealed,

and the plaintiff has cross appealed from that portion of

the order that related to the particular taxes to which the

court’s order was applicable.

A petition seeking leave to file an original action in this

court was filed on May 10, 1971 on behalf of Eugene L.

Maynard, ‘‘a natural person, citizen and taxpayer of the

State of Illinois,’’ and also on behalf of one high school

district and three grade school districts. Leave to file was

granted on May 12, 1971. The defendants are those state

and county officers who are defendants in the Lake Shore

ease. The complaint, which sought a declaratory judg-

ment and other relief, alleges the adoption of Article [X-A.

It is suggested that ‘‘the Lake Shore case will come to the

Court in a flawed condition in that it will not properly

present the parties and arguments essential for a full de-

termination of the important revenue question. * * * With-

out the presence of Eugene L. Maynard, neither the pres-

ence nor the position of a natural person will be ade-

quately presented to this Court.’’ The complaint alleged

that it was filed by Maynard, who is alleged to own non-

business personal property, on behalf of himself and all

others similarly situated. It also alleged that it was filed

on behalf of the named public bodies for themselves and

all other public bodies which receive proceeds from per-

sonal property taxation.

The deficiencies in parties and in legal arguments in

the Lake Shore case is said to lie in the fact that the

only plaintiff in that case is a corporation, and in the fact

that the complaint in that case does not contain a direct

request for a declaration of the unconstitutionality of Ar-

ticle IX-A. ‘‘The pleadings of that case place into ques-

tion only certain sections of the Illinois Revenue Act. The

23

attack is made upon these sections as affected by the

passage of Article [X-A rather than upon the constitu-

tionality of the Article itself. * * * If the Court consid-

ers the Lake Shore case without additignal parties and ar-

guments, it may be foreclosed from ng on the central

issue of constitutionality of the Amendment.’’

No new facts were alleged in the Maynard case, and the

defendant Lehnhausen has conceded the factual questions

and filed a brief to stand as its answer in this case. The

brief on behalf of the defendant county officers appears

similarly to have been intended to stand as a motion to

dismiss the complaint.

Another action was instituted by a complaint for de-

claratory judgment which was filed in the circuit court of

Cook County on May 8, 1971, on behalf of several plain-

tiffs. Clemens K. Shapiro alleged that he is a natural

person who owns personal property in his own name and

real property jointly with his wife, none of which prop-

erty is owned or used for purposes of business, and all

of which property is owned and used for his personal en-

joyment and that of his family. Jerome Herman alleged

that he is a natural person and operates and conducts a

business as a sole proprietor. Guy S. Ross and Eugene D.

Ross allege that they are natural persons and operate, as

a partnership, a business which owns property. M. Weil

and Sons, Inc., a corporation, alleges that it is the owner

of property situated in Cook County.

The complaint alleges that each of the plaintiffs is act-

ing in a representative capacity on behalf of all others sim-

ilarly situated. The defendants are those state and county

officers who were named in the Lake Shore complaint. The

~ complaint alleges the adoption of Article [X-A and asserts

various interpretations of that Article, some of which are

24

advanced by all of the plaintiffs and others by one or

another of the plaintiffs. To this complaint the defendant

Lehnhausen, Director of the Department of Local Govern-

ment Affairs, filed a motion to dismiss on May 9, 1971.

He also filed a ‘‘Petition for Instructions’’ which recited

that the Lake Shore and Maynard cases were pending

in the Supreme Court of Illinois, asserted that the issues

in all of the three cases were substantially the same, and

that it ‘‘would appear to be a duplication of effort for this

Court to consider the issues involved in the case at bar

[the Shapiro case] while at the same time the Illinois

Supreme Court has essentially the same issues before it

for consideration.’’ The petition for instructions suggested

that the Shapiro case be held in abeyance for the determi-

nation of the cases already pending before the Supreme

Court. No order was entered with respect to this petition.

On May 19, 1971, a motion to strike was filed in behalf

of the defendant county officers. On May 28, 1971, an

order was entered, by a judge other than the judge who

heard the Lake Shore case, finding that the action was

properly maintained as a class action and that each plain-

tiff had standing to bring the action in its own behalf and

was a proper representative of the class he purported to

represent. The order found that Article [X-A ‘‘is free of

the ambiguity and uncertainty of intendment charged by

the plaintiffs, and that its intendment is clearly declared

to prohibit the taxation of personal property by valua-

tion exclusively as to natural persons, where that prop-

erty is used, by them, for the personal enjoyment of them-

selves and their families.’’ Except as to the plaintiff Clem-

ens K. Shapiro and members of his class, the complaint

was dismissed. All of the plaintiffs in the Shapiro case

have appealed from this judgment.

25

The plaintiffs in the Maynard and Shapiro cases jus-

tify the institution of their actions upon the ground that

there are deficiencies as to parties and as to legal propo-

sitions in the Lake Shore case which might, without the

assistance which they volunteer to supply, preclude the

possibility of full consideration of the issues by this court.

That it is not necessary that each person or group of

persons favorably or unfavorably affected by a legisla-

tive classification be made parties to an action challeng-

ing the validity of that classification is apparent. Major

cases involving discrimination of the) sort here alleged

have not required the presence, as parties, either in per-

son or by representative, of all those affected. See, e.g.,

Lawrence v. State Tax Com. of Miss. (1932) ,’286 U.S. 276,

52 S. Ct. 556, 76 L. Ed. 1102.

There are no factual issues in the present cases, and the

order of this court which consolidated the Lake Shore and

Maynard cases provided: ‘‘Counsel may brief and argue

all issues as to the validity and effect of the constitutional

amendment known as Article IX-A of the Constitution of

1870.’’ (See Hux v. Raben (1967), 38 Ill. 2d 223.) Addi-

tional class actions were not necessary to place before the

court all pertinent legal theories. We shall, however, con-

sider the arguments advanced by counsel in those cases.

Neither the plaintiffs in the Maynard case nor those in

the Shapiro case are content with the interpretation of

Article [X-A arrived at by Judge Walter P. Dahl in the

Lake Shore case. That interpretation was that the new

Article ‘‘purports to prohibit the taxation of personal

property by valuation as to ‘individuals’, and only as to

‘individuals,’ while leaving unaffected those provisions of

the Illinois Constitution and the Revenue Act of Illinois

* * * which imposed such personal property taxes as to

26

property owned by corporations and other ‘non-individ-

uals.’ 9?

One alternative construction, advanced by the plaintiffs

in the Shapiro case, is that the ‘‘Illinois’ Constitution of

1870, as amended by the addition of Article [X-A, specifi-

cally prohibits, and declares to be unconstitutional the im-

position in Illinois of the property taxes imposed by Ar-

ticle IX, Section 1, on all forms of property, real and

personal or other, regardless of the ownership of that

property or the use to which that property is put by its

owner.’’ This construction is achieved by disregarding the

fact that Article [X-A is clearly concerned only with the

taxation of personal property, and by concentrating upon

the fact that the last sentence in the official explanation

which appeared upon the ballot at the election on November

3, 1970, when Article [X-A was approved, mentioned taxes

upon both real and personal property. That explanation

was as follows:

‘‘The amendment would abolish the personal prop-

erty tax by valuation levied against individuals. It

would not affect the same tax levied against corpora-

tions and other entities not considered in law to be

individuals. The amendment would achieve this result

by adding a new article to the Constitution of 1870,

Article [X-A, thus setting aside existing provisions of

Article IX, Section 1, that require the taxation by valu-

ation of all forms of property, real and personal or

other, owned by individuals and corporations.’’

The last sentence of the explanation, however, is not a part

of the amendment, and its reference to real property taxes

was made in describing the existing provisions of Article

IX, Section 1, which are modified by Article [X-A.

Based upon the circumstance that the phrase ‘‘as to in-

dividuals’’ is printed in italics in Article [IX-A, the May-

27

nard plaintiffs turn to materials other than the legislative

explanations in a search for a technical meaning. They

say; ‘‘The unusual circumstance that the words ‘as to in-

dividuals’ are italicized in the constitutional amendment,

an unprecedented practice in constitutional drafting,

strongly suggests that the General Assembly, in draft-

ing Senate Joint Resolution No. 30 used the word ‘indi-

viduals’ as one having established technical significance

and usage in the classification of taxpayers upon whom

personal property taxes have been imposed.’’

They purport to find the technical meaning that they

seek in the circumstance that two different forms, admin-

istratively prescribed, have been used for personal prop-

erty tax returns. One form is to be used by ‘‘individuals,

partnerships, and unincorporated associations owning or

controlling personal property used in agriculture, and all

individuals owning or controlling any personal property

which is not owned or used in connection with any busi-

ness (other than agriculture) * * *,” The other form is

to be used by “*[ p]roprietorships, partnerships and unin-

corporated associates engaged in business (other than ag-

riculture) * * *.”? On the assumption that the word ‘‘in-

dividuals’’ was intended to have an established techni-

cal meaning because it was printed in italics, the Maynard

plaintiffs, and the Shapiro plaintiffs as well, argue that

the word ‘‘individuals’’ was used to denote a class of

natural persons owning personal property not used in

business.

There is, however, a more prosaic explanation for the

fact that the words ‘‘as to individuals”’ are printed in ital-

ies. When Senate Joint Resolution No. 30 was originally

introduced on April 29, 1969, the proposed Article IX-A

read as follows: ‘‘Notwithstanding any other provision of

es

28

this Constitution, the taxation of personal property by

valuation is prohibited.’’ (Senate Journal, April 29, 1969,

p. 1038.) On May 15, 1969, Senate Joint Resolution No. 30

was amended ‘‘by striking the period and adding the fol-

lowing: ‘as to individuals.’ ’’ Senate Journal, May 15, 1969,

pp. 1407-8.

The added words were placed in italics in accordance

with routine legislative practice, which contemplates that

in the case of amendments, new material is to be itali-

cized. The rules of the Senate of the 76th General Assembly

provided: ‘‘All resolutions originated in the Senate pro-

posing amendments to the Constitution shall be ordered

printed and shall be printed in the same manner in which

bills are printed.’’ (Senate Journal, Feb. 18, 1969, p. 163.)

And as to bills, they provided: ‘‘Senate Bills and House

Bills in the Senate shall be printed with new matter in

italics and omitted or superseded matter enclosed in brack-

ets and underlined.’’ Senate Journal, Feb. 18, 1969, p. 161.

There is thus no underpinning for the argument that

the General Assembly intended that the word ‘‘individu-

als’? should be given an artificial meaning. The official

explanations, which are not discussed in the Maynard

brief, definitely negative such an intention. We have ex-

amined the other materials to which the Maynard and Sha-

piro plaintiffs have referred, but have found nothing which

persuades us that the words of Article [X-A should be

given anything other than their natural meaning.

We conclude that the meaning of Article [X-A is that

ad valorem taxation of personal property owned by a nat-

ural person or by two or more natural persons as joint

tenants or tenants in common is prohibited.

The Maynard case plaintiffs and all of the Shapiro case

plaintiffs, with the exception of Shapiro, contend that Ar-

29

ticle IX-A, so construed, violates the equal protection

clause of the fourteenth amendment to the constitution

of the United States. Lake Shore contends that it is the

Revenue Act, which must be regarded as amended by

Article IX-A, rather than the Article itself, which vio-

lates the equal protection clause. We shall first consider the

basic question of the validity of the discrimination effected

by Article [X-A.

The new Article classifies personal property for the pur-

pose of imposing a property tax by valuation, upon a ba-

sis that does not depend upon any of the characteristics

of the property that is taxed, or upon the use to which it

is put, but solely upon the ownership of the property. If

the property is owned by A, it is taxable; if it is owned

by B, it cannot be taxed. Of course, the equal protection

clause of the fourteenth amendment does not prohibit clas-

sification, and absolute precision is not required of the

states in drawing the lines between classes. Nevertheless,

a state may not, under the guise of classification, arbi-

trarily discriminate against one and in favor of another

similarly situated.

The Supreme Court of the United States has thus de-

scribed the governing principles:

“Of course, the States, in the exercise of their tax-

ing power, are-subject to the requirements of the Equal

Protection Clause of the Fourteenth Amendment. But

that clause imposes no iron rule of equality, prohibit-

ing the flexibility and variety that are appropriate to

reasonable schemes of state taxation. The State may

impose different specific taxes upon different trades

and professions and may vary the rate of excise upon

various products. It is not required to resort to close

distinctions or to maintain a precise, scientific uni-

formity with reference to composition, use or value.

Bell’s Gap R. Co. v. Pennsylvania, 134 U.S. 232, 237;

30

Magoun v. Illinois ‘Trust & Savings Bank, 170 U.S.

283, 293; * * * State Board of Tax Comm’rs of Indi-

ana v. Jackson, 283 U.S. 527, 537. ‘To hold otherwise

would be to subject the essential taxing power of the

State to an intolerable supervision, hostile to the

basic principles of our government and wholly beyond

the protection which the general clause of the Four-

teenth Amendment was intended to assure.’ Ohio Oil

Co. v. Conway, supra, 281 U.S., at 159.

‘*But there is a point beyond which the State can-

not go without violating the Equal Protection Clause.

The State must proceed upon a rational basis and

may not resort to a classification that is palpably ar-

bitrary. The rule often has been stated to be that the

classification ‘must rest upon some ground of differ-

ence having a fair and substantial relation to the ob-

ject of legislation.’ Royster Guano Co. v. Virginia, 253

U.S. 415; Louisville Gas & Electric Co. v. Coleman, 277

U.S. 37; Atr-Way Electric Appliance Corp. v. Day,

266 U.S. 71, 85; Schlesinger v. Wisconsin, 270 U.S. 230,

240; Ohio Oil Co. v. Conway, 281 U.S. 146, 160 * * *.”’

Allied Stores of Ohio, Inc. v. Bowers, (1959), 358 U.S. 522,

526-27, 79 S. Ct. 437, 3°L. Ed. 2d 480, 484-85.

When classifications are reasonable, it is because of dif-

ferences in the nature of the property or in the use to

which it is put. The nature of the tax is important, too, for

what may be a reasonable classification for a license, or

for a privilege tax, is not necessarily a reasonable classi-

fication for a property tax.

Mr. Justice Brandeis stated the criterion this way in his

dissenting opinion in Quaker City Cab Co. v. Pennsylvania,

277 U.S. 389, 406, 48 S. Ct. 553, 72 L. Ed. 927, 932: ‘‘In

other words, the equality clause requires merely that the

classification shall be reasonable. We call that action rea-

sonable which an informed, intelligent, just-minded, civ-

31

ilized man could rationally favor. In passing upon legis-

lation assailed under the equality clause we have declared

that the classification must rest upon a difference which

is real, as distinguished from one which is seeming, spe-

cious, or fanciful, so that all actually situated similarly

will be treated alike; that the object of the classification

must be the accomplishment of a purpose or the promo-

tion of a policy, which is within the permissible functions

of the State; and that the difference must bear a relation

to the object of the legislation which is substantial, as dis-

tinguished from one which is speculative, remote or neg-

ligible.’’

Article LX-A must be read against the scheme of prop-

erty taxation established pursuant to Article IX of the

Constitution of 1870, which, with respect to property taxes

contemplates the levy of ‘‘a tax, by valuation, so that

every person and corporation shall pay a tax in propor-

tion to the value of his, her or its property * * *.’’ (Con-

stitution of 1870, Article IX, Sec. 1.) Taxes levied by mu-

nicipal corporations are required to be ‘‘uniform in re-

spect to persons and property, within the jurisdiction of

the body imposing the same.’’ (Constitution of 1870, Ar-

ticle IX, Sec. 9.) The permissible exemptions from taxa-

tion are thus described. ‘‘The property of the state, coun-

ties, and other municipal corporations, both real and per-

sonal, and such other property as may be used exclusively

for agricultural and horitcultural societies, for school, re-

ligious, cemetery and charitable purposes, may be exempted

from taxation; but such exemption shall be only by gen-

eral law. * * *’’ Constitution of 1870, Article IX, Sec. 3.

Against this background the incongruity of the prohi-

bition contained in Article [X-A is apparent. It cannot ra-

tionally be said that the prohibition promotes any policy

32

other than a desire to free one set of property owners

from the burden of a tax imposed upon another set. All of

the arguments in favor of the abolition of the personal

property tax upon the property owned by natural persons

apply with equal force in favor of the abolition of that

tax upon the property owned by others. For the purpose

of a tax by valuation upon the ownership of real or per-

sonal property, the identity of the owner is a neutral con-

sideration, as is his status as sole proprietor, joint ten-

ant, tenant in common, partner (Ill. Rev. Stat. 1969, ch.

10614, par. 25), limited partnership (Ill. Rev. Stat. 1969,

ch. 10614, par. 61), member of a professional service cor-

poration (Ill. Rev. Stat. 1969, ch. 32, par. 415-1 et seq.), or

of a professional association (Ill. Rev. Stat. 1969, ch. 1061,

par. 101 et seq.; see Sup. Ct. Rule 721; 43 Ill. 2d, Rule 721).

We hold, therefore, that the discrimination produced

by Article [X-A violates the equal protection clause of the

fourteenth amendment. Apart from that discrimination,

the validity of the Revenue Act is not challenged, and we

hold that it is Article IX-A which must fall. The validity

of Article IX of the Constitution and of the Revenue Act

are therefore not affected.

The judgment of the circuit court of Cook County in

No. 44199 (Lake Shore) is reversed, and the cause is re-

manded to that court with directions to dismiss the com-

plaint. Insofar as the judgment of the circuit court in No.

44432 (Shapiro) dismissed the complaint as to all of the

plaintiffs other than Clemens K. Shapiro, it is affirmed;

insofar as that judgment sustained the complaint as to

Clemens K. Shapiro, it is reversed and the cause is re-

manded to that court with directions to dismiss the com-

plaint. In No. 44308 (Maynard), the complaint is dismissed.

33

No. 44199. Reversed and remanded with directions.

No. 44432. Affirmed in part; reversed in part, and

remanded with directions.

No. 44308. Complaint dismissed.

(Lake Shore Auto Parts Co. v. Korzen, Nos. 44199,

44308, 44432)

MR. JUSTICE DAVIS, dissenting:

The majority opinion holds that our State Constitution

of 1870, as modified by Article [X-A, may not validly clas-

sify exemptions from ad valorem personal property taxa-

tion on the basis of the ownership of the property, and that

such exemption may be made only upon a classification

based upon the nature of the property or its use. I dissent

from this pronouncement.

It is clear that the United States Constitution imposes

no particular modes of taxation upon the states and leaves

them unrestricted in their power to tax those domiciled

within their borders so long as the tax imposed is upon

property within the state, or on privileges enjoyed there,

and so long as the tax is not so palpably arbitrary or un-

reasonable as to infringe upon the equal protection and

due process requirements of the fourteenth amendment,

Lawrence v. State Tax Commission of Mississippi, 286

U.S. 276, 284, 52 S. Ct. 556, 559, 76 L. Ed. 1102, 1105.

The majority opinion recognizes that ‘‘the equal pro-

tection clause of the fourteenth amendment does not pro-

hibit classification, and absolute precision is not required

of the states in drawing the line between classes’’; and

that, ‘‘nevertheless, a state may not, under the guise of

classification, arbitrarily discriminate against one and in

favor of another similarly situated.’’ This general rule is

found in the quotation from Allied Stores of Ohio v, Bow-

« 8&4

ers, 358 U.S. 522, 79 S. Ct. 437, 3 L. Ed. 2d 480, cited by

the majority. The rule has been expressed and exempli-

fied many times in varying terms. Examples are: ‘‘Any

classification of taxation is permissible which has reason-

able relation to a legitimate end of governmental action.’’

(Welch v. Henry, 305 U.S. 134, 144, 59 S. Ct. 121, 124,

83 L. Ed. 87, 92); ‘‘It is a salutary principle of judicial

decision, * * * that the burden of establishing the uncon-

stitutionality of a statute rests on him who assails it, and

that courts may not declare a legislative discrimination

invalid unless, viewed in the light of facts made known

or generally assumed, it is of such a character as to pre-

clude the assumption that the classification rests upon

some rational basis within the knowledge and experience of

the legislators. A statutory discrimination will not be set

aside as the denial of equal protection of the laws if any

state of facts reasonably may be conceived to justify it.’’

(Metropolitan Casualty Ins. Co. v. Brownell, 294 U.S. 580,

584, 55 S. Ct. 538, 540, 79 L. Ed. 1071, 1073.) Due process

imposes no rigid rule of equality in taxation, and irregu-

larities resulting from singling out one particular class

for taxation or exemption infringe no constitutional re-

quirement. (Carmichael v. Southern Coal & Coke Co., 301

U.S. 495, 509, 57 S. Ct. 868, 872, 81 L. ed. 1245, 1253). It is

only the invidious discrimination or classification which is

patently arbitrary and utterly lacking in rational justifi-

cation which is barred by the due process or equal protec-

tion clauses. Flemming v. Nestor, 363 U.S. 603, 611, 612,

80 S. Ct. 1367, ——4 L. ed. 2d 1435, 1445.

The variety of ways of expressing the rule that a leg-

islative classification for taxation purposes is not violative

of the fourteenth amendment if it has a reasonable rela-

tion to the subject of the particular legislation so that all

35

persons similarly situated are treated alike, and pertinent

citations, are found in 16A C.J.8. Constitutional Law, Sec-

tions 520, 521, 649.

In this litigation, as is often the case, the particular

expression of the rule which the majority of the court

choose to rely upon may be dictated by the outcome which

the judges of the majority think to be proper. Beyond

doubt, the fourteenth amendment does not impose on the

states an inflexible and technical rule of equal taxation,

and the extent to which the states may go in devising a

legislative classification for taxation is illustrated by the

statement of the Supreme Court in Lawrence v. State Tax

Commission of Mississippi, 286 U.S. 276, 284, 285, 52 S. Ct.

556, 559, 76 L. ed. 1102, 1108:

‘‘The equal protection clause does not require the

state to maintain a rigid rule of equal taxation, to re-

sort to close distinctions, or to maintain a precise sci-

entific uniformity; and possible differences in tax bur-

dens not shown to be substantial or which are based on

discriminations not shown to be arbitrary or capricious,

do not fall within constitutional prohibitions.’’

The Supreme Court in Lawrence also stated that there

is no constitutional requirement that a system of taxation

should be uniform as applied to individuals and corpora-

tions, regardless of the circumstances in which it operates

(286 U.S. 276, 283, 52 S. Ct. 556, 558, 76 L. ed. 1107), and

we have just recently held that for the purpose of income

taxation, corporations may be placed in one class and indi-

viduals in another and each taxed differently. (Thorpe v.

Mahin, 43 Ill. 2d 36.) The language of the court at pages

45 and 46 is worthy of repetition.

“It is next contended that the Act violates the uni-

formity provision of Section 1 of Article IX of our

constitution and the equal protection and due process

36

requirements of the fourteenth amendment to the

United States constitution by creating multiple classes

and discriminating unreasonably among them. This

contention is advanced specifically against the provi-

sions' which tax corporations at a 4% rate and indi-

viduals, trusts, and estates at 214% rate.

‘*Both the equal protection argument and the uni-

formity argument depend on the reasonableness of put-

ting corporations in one class and individuals, trusts,

and estates in another class for purposes of this tax.

(See Grenier é Co. v. Stevenson, 42 Ill. 2d 289). When

the due process contention has been advance, this

court, citing Supreme Court cases, has stated: ‘It has

long been settled that the power of the legislature to

make classifications, particularly in the field of taxa-

tion, is very broad, and that the fourteenth amendment

imposes no ‘‘iron rule’’ of equal taxation. (Citations.)

The reasons justifying the classification, moreover,

need not appear on the face of the statute, and the

classification must be upheld if any state of facts

reasonably can be conceived that would sustain it.

(Citations.) The burden therefore rests on one who

assails the statute to negate the existence of such

facts. (Citations.)’ Department of Revenue v. Warren

Petroleum Corp., 2 Ill. 2d 483, 489-490.

‘“When the uniformity contention has been advanced

this court has stated: ‘It is well established that the

legislature has broad powers to establish reasonable

classifications in defining subjects of taxation. * * *

Such classification must, however, be based on real

and substantial differences between persons taxed and

those not taxed. (Citations.)’ (Klein v. Hulman, 34 Til.

2d 343, 346-347.) ‘In order to prevail on an allegation

that a statute or portion of a statute is unconstitu-

tional, the plaintiff has the burden of showing how the

legislature has violated the constitution.’ Grenier &

Co. v. Stevenson, 42 Ill. 2d 289, 291.

‘In short, petitioners have the burden of showing

that the challenged classification is unreasonable. Their

37

only assertion is that,‘corporations are at a disad-

vantage when they compete in the same type of ‘busi-

ness with individual proprietorships or partnerships

because of the rate differential.’ This assertion has

been rejected by the Supreme Court as to a Federal

tax (Flint v. Stone Tracy Co., 220 U.S. 107, 31 S. Ct.

342, 55 L. Ed. 389), and as to a State tax (Fort Smith

Lumber Co. v. Arkansas ex rel. Arbuckle, 251 U.S. 532,

40 S. Ct. 304, 64 L. Ed. 396), and by this court (People

v. Franklin National Insurance Co. of New York, 343

Ill. 336; Michigan Millers Mutual Fire Insurance Co.

v. McDonough, 358 Ill. 575), where, for purposes of

the tax in question, corporations were placed in one

class and individuals in another and each were taxed

differently.’’

The majority, however, holds that as to a property tax

the classification for exemption or taxation may not be

based upon the character of the ownership, but only upon

the nature of the property itself. Thus, the majority is of

the opinion that the classification may not be based upon

the corporation — individual distinctions which we upheld

in Thorpe.

In Thorpe this court reversed its prior holding that in-

come is property (Bachrach v. Nelson, 349 Ill. 579), and

held that an income tax was not a property tax. The sig-

nificance of this determination was that Section 1 of Article

IX of our Constitution of 1870 required the levying of a

tax ‘‘by valuation, so that every person and corporation

shall pay a tax in proportion to the value of his, her or

its property * * *.’’ At the same time, the constitutional

provisions permitted a tax upon franchises and privileges

in such manner as the legislature might direct, so long as

it was uniform as to each ‘‘class.’’ Obviously, the legis-

lature could not, under the foregoing provisions, impose

38

an income tax upon corporations at one rate and upon

individuals at a lesser rate if it were a tax on property.

Our constitution then prohibited any tax on property un-

less structured to be uniform as to valuation.

After reaching the conclusion that an income tax was

not a property tax, the court faced no barrier in uphold-

ing the Illinois Income Tax Act. In the case at bar, after

Article IX-A amendment to the Constitution of 1870 was

adopted, the uniformity provisions of Section 1 of Article

IX were no longer effective as to the taxation of personal

property of individuals, and the court should have found

no impediment to upholding the validity of Article [X-A

and the abolishment of this tax as to individuals.

Constitutional provisions requiring property to be taxed

uniformly in proportion to its value are not uncommon

to the states. In the California Railroad Tax cases (San

Mateo County v. Southern Pacific R. Co., 13 Fed. 722,

appeal dismissed per stipulation, 116 U.S. 138; Santa Clara

County v. Southern Pacific R. Co., 18 Fed. 385, aff’d other

grounds, 118 U.S. 394), which held that unequal taxation,

based upon the character of the owner, was forbidden by

the fourteenth amendment, a constitutional provision re-

quiring uniformity of taxation was involved. Even though

the California constitution specified that all property be

taxed in proportion to its value, a state statute especially

provided that as to railroad properties only, the amount

of a mortgage on the real estate was not to be deducted in

ascertaining the value of the real estate for taxation pur-

poses. The trial court quite properly held that this method

of valuation, as to railroads only, was improper under the

circumstances, and the United States Supreme Court af-

firmed the lower court on a non-constitutional basis with-

out reaching the constitutional question. The California

39

Railroad Tax cases should be read, with cognizance, that

the state constitution required all property to be taxed in

proportion to its value, and that the cases arose at a time

when it was necessary to establish that the word, ‘‘persons’’

as used in the fourteenth amendment, included corpora-

tions. Apparently, the latter point had a strong oe

on the expressions found in these cases.

In the case at bar, by virtue of the adoption of Article

IX-A, there is no constitutional requirement that taxes on

personal property be uniform as to individuals and corpo-

rations so that each pays a tax in proportion to the value

of his or its property. Article IX-A, which we are called

upon to consider, eliminated this requirement; it provides

that ‘‘the taxation of personal property is prohibited as to

individuals.’’ Thus, the case at bar is a far cry from one

in which the legislature is attempting to discriminate be-

tween individuals and corporations in the face of a consti-

tutional provision prohibiting such discrimination. Here

the question for determination is whether, absent the re-

quirement of a state constitution that corporate and indi-

vidual personal properties be taxed the same, the equal

protection clause of the fourteenth amendment permits

them to be taxed differently? I believe that it does!

Without the constitutional requirement of uniformity on

the taxation of properties, there is no reason or justifi-

cation in the case at bar for stating that personal prop-

erty taxation may not be classified on the basis of the

ownership of the property. The Constitution of 1870, as .

amended by Article IX-A, does not so provide, and the

Constitution of 1970 suggests the contrary. Article [X of

the Constitution of 1970 relates to revenue, and Section-5

thereof pertains to personal property taxation. Subsec-

tion (a) thereof provides that the legislature ‘‘may clas-

40

sify personal property for purpose of taxation by valua-

tion, abolish such taxes on any or all classes and author-

ize the levy of taxes in lieu of the taxation of personal

property by valuation.’’ (Emphasis ours.) Without more,

it could be said that the word ‘‘classes’’ refers only to

classes of property, but subsection (c) refers to the abo-

lition of all ad valorem personal property taxes by Janu-

ary 1, 1979, and the replacement of the lost revenue, and

provides: ‘‘Such revenue shall be replaced by imposing

statewide taxes, other than ad valorem taxes on real es-

tate, solely on those classes relieved of the burden of pay-

ing ad valorem personal property taxes because of the

abolition of such taxes subsequent to January 2, 1971.’’

(Emphasis ours.) Obviously, the word ‘‘classes’’ as there

used, does not refer to classes of property; it refers to

classes of property owners, and provides for taxation ac-

cording to the character of the owner. If the majority

opinion is to stand and Article IX-A held to be uncon-

stitutional, then under consistent application of its ration-

ale, subsection (a) of Section 5 of the new constitution is

likewise unconstitutional.

The majority opinion chose to rely upon the rationale

of Quaker City Cab Co. v. Commonwealth of Pennsylvania,

277 U.S. 389, 48 S. Ct. 553, 72 L. ed. 927. I believe that the

elucidation and logic of the dissent of Mr. Justice Brandeis,

in which Mr. Justice Holmes concurred, offers the better

reason. Therein, Mr. Justice Brandeis made some obser-

vations which are particularly apropos here. The court had

under consideration a tax on the gross receipts of cor-

porate taxicab companies where no similar tax was im-

posed upon the receipts of individuals who operated taxi-

cabs. The majority held that the classification was based

solely upon the character of the owner, and that it violated

the fourteenth amendment.

41

In his dissenting opinion, 277 U.S. 389, 403-412, 48 S. Ct.

553, 555-558, 72 L. ed. 927,——, Mr. Justice Brandeis ob-

_ served that the tax applied equally to all corporations, for-

eign and domestic. He stated that the fundamental question

before the court was:

‘*Does the ‘equality clause prevent a state from im-

posing a heavier burden of taxation upon corporations

engaged exclusively in intrastate commerce, than upon

individuals engaged under like circumstances in the

same kind of business? The narrowed question pre-

sented is whether this heavier burden may be imposed

by a form of tax ‘not peculiarly applicable to corpo-

rations’; that is, by a tax of such a character that it

might have been extended to individuals if the Legis-

lature had seen fit to do so.’’

He then pointed out that the difference between a business

carried on in corporate form and one carried on by natu-

ral persons is ‘‘a real and important one.’? He observed

that the discrimination was not based upon any difference

in the source of income or in the character of the prop-

erty employed, and stated the obvious: that the require-

ment that a classification must be reasonable does not im-

. ply that the policy embodied in the classification must be

deemed by the court to be a wise one. He concluded that

a state is permitted to impose upon corporations more than

their pro rata share of the burden of taxation, and that

nothing in the Federal constitution prohibits this,

It seems that this is exactly what we held in Thorpe v.

Mahin, 43 Ill. 2d 36. We recognized what we called the

obvious advantages of carrying on a business in the corpo-

rate form. The privilege of carrying on a business in this

form has many advantages: the corporate ownership of

property, freedom from personal liability for corporate

obligations, continuity of existence, ete. There we acknowl-

42

edged that there are sufficient differences between the priv-

ilege of earning or receiving income as a corporate entity

and that of earning or receiving income as an individual,.

to justify the variance in tax rates between the individual

and the corporation, and here we should recognize that

there are sufficient differences between the privilege of

owning property as a corporate entity and the privilege of

owning it as an individual to justify the exemption in the

case of the individual property owner. The fact that the

corporation may in some respects be placed at a disad-

vantage in its competition with individuals owning simi-

‘lar property and engaged in the same business should not

condemn the classification as unreasonable. Thorpe v.

- Mahim, supra, 46.

There is no more compelling reason to suggest that the

classifications for personal property tax purposes must

be based upon the nature of the property than there is

to suggest that the classifications for income tax purposes

must be based on the source or type of income to be re-

ported. The Article IX-A constitutional amendment cre-

ates a classification based upon the distinctions inherent

between corporations and individuals —a distinction which

we have recognized and upheld as valid under the equal

protection clause requirement of the fourteenth amendment

in Thorpe v. Mahin.

Another matter is worthy of mention in our considera-

tion of this case. The evils and the inequities in the ad-

ministration of the personal property tax collections in

this State are known to everyone. That these inequities

apply with equal force to corporate taxpayers and indi-

vidual taxpayers may, or may not, be totally true. The de-

sire and purpose of systematically eliminating this archaic

form of taxation are apparent from the actions of the

lt. bie i > ee - ee | ee ee Bs

43

people and the legislature of the State. The General As-

sembly, which drafted and adopted Senate Joint Resolu-

tion No. 30, had previously at the same legislative session

already exempted from such taxation, household furniture

and one automobile, per household, used for personal pleas-

ure. (Ill. Rev. Stat. 1969, ch. 120, par. 500.21a.) The Article

IX-A amendment was overwhelmingly ratified by the people .

of the State. The Constitution of 1970, likewise adopted by

the vote of the people, expressed their concern over the

form and use of personal property taxation. The newly-

adopted constitution prohibits the reinstatement of any

ad valorem personal property tax abolished before July 1,

1971, the effective date of the new constitution. This pro-

_ vision refers to the personal property tax as to individ-

uals which was abolished by Article [X-A, and the major-

ity opinion runs counter to this constitutional prohibition

in that it reinstates the personal property tax as to indi-

viduals. In addition, the new constitution provides that all

ad valorem personal property taxes shall be abolished on

or before January 1, 1979.

The obvious spirit of the Article IX-A amendment, the

will of the people, as expressed by its adoption, and the

intent and purpose of the legislature, should not be

thwarted unless a construction to this effect is required.

Thus, it is very appropriate that we consider the mischief

sought to be remedied and the purpose to be accomplished

by the Article IX-A amendment. (Wolfson v. Avery, 6 Ill.

2d 78, 88). Likewise, the court should memorialize the sal-

utary rule of law that an amendment to a state constitu-

tion should be deemed violative of the Federal Constitu-

tion only where the asserted constitutional_rights cannot

otherwise be protected and effectuated. Reynolds-v, Sims,

377 U.S. 533, 584, 84 S. Ct. 1362, ——, 12 L. ed. 2d 506, 540.

44

After considering the background of this constitutional

amendment and the purpose which it, along with the other

contemporary legislative enactments and constitutional

adoptions seeks to accomplish, I believe that the classifi-

cation found in the Article [IX-A amendment does not con-

stitute an invidious discrimination; that it seeks to accom-

plish and promote a valid policy expressive of the will of

the people and the intent and purpose of the legislature;

and that the distinction upon which the classification for

exemption is based does not overstep the limitations im-

posed by the fourteenth amendment.

ound of this constitutional

which it, along with the other

tments and constitutional

I believe that the classifi-

-A amendment does not con-

tion; that it seeks to accom-

licy expressive of the will of

d purpose of the legislature ;

n which the classification for

overstep the limitations im-

endment.

Hupreme Court of the Anited States

Robert J. Lehnheusen,

The petition herein for a writ of certiorari to the Supreme Court of the State of .. 2iRineis

is granted. The case is consolidated with No. 71-691 and a total

of one hows is allotted for oral argument.

Supreme Court of the Anited States

No. 71-691 x@atehenGienante

Edward J. Barrett, County Clerk ef Cook

County, Illinois, et al.,

petitioners,

Ve

Clemens K. Shapiro, et al.

@rder allowing certiorari. Fild. ss ApEAL. 39 72

is granted. The case ig consolidated with No. 71-685 and a total

of one hour is alletted for oral argument.

_—— NOV 13 1972

Supreme Court of the United, States. 0

November Term, A.D. 1971

No. 71-691

EDWARD J. BARRETT, County Clerk of Cook County,

Illinois, et al.,

Petitioners,

VB.

CLEMENS K. SHAPIRO, et al.,

Respondents.

EDWARD V. HANRAHAN,

State’s Attorney of Cook County,

500 Chicago Civic Center, y

Chicago, Illinois 60602, Tel. (812), 321-5464,

Attorney for Petitioners.

Ausrey F, Kapran, f

Assistant State’s Attorney,

Of Counsel.

SSS

KEENAN PRINTING COMPANY <> ses

4

INDEX

Pace

ROTNER TOUS TIS. 0 ia ik. 0555 Ove sccdecascsecs 1

Order of Illinois Supreme Court denying Petitions

ES ee EE DE EME ET Pee Tee 5

Opinion of Supreme Court of Illinois .............. 7

Order of Judge Dahl in Lake Shore Auto Parts Co.

v. Korzen, et al., Case Number 70 CH 5123 ....... 33

Order of Judge Donovan in Shapiro, et al. v. Barrett,

ob at. tees Dreamer Ti Es GIGS no os csv cacavccccecs 38

_ eee

Supreme Court of the United States

Ocroser Term, 1972

No. 71-691

EDWARD J. BARRETT, County Clerk of Cook County,

Illinois, et al.,

Petitioners,

vs.

CLEMENS K. SHAPIRO, et al.,

Respondents.

APPENDIX

RELEVANT DOCKET ENTRIES

Date Record Page

12- 9-70 Complaint for Declaratory Judgment, In-

junction and other Relief filed, Lake

Shore Auto Parts Co. v. Korzen, et al.,

* Case No. 70 Ch 5123 63

1-12-71 Answer of defendants Korzen, Keane, Sem-

row, Cullerton, Barrett filed 81

2- 4-71 Answer of defendant Lehnhausen 88

2- 8-71 Plaintiff’s Motion for Summary Judgment 96

2- 8-71 Plaintiff’s affidavit in support of Motion for

Summary Judgment 99

2-16-71 Motion of defendant Lehnhausen for Sum-

mary Judgment 115

2-16-71 Suggestions in support of defendant Lehn-

hausen’s Motion for Summary Judgment 104

2-16-71

2-24-71

3-23-71

3-23-71

3-26-71

3-30-71

3-31-71

4-23-71

5- 8-71

5- 9-71

2

Amended Answer of defendants Korzen,

Keane, Semrow, Cullerton, Barrett 110

Plaintiff’s Brief in support of Motion for

Summary Judgment and in answer to de-

fendant Lehnhausen’s Motion for Sum-

mary Judgment 117

Motion of defendants. Korzen, Keane, Sem-

row, Cullerton, Barrett for Summary

Judgment 183

Brief in Suport of Motion for Summary

Judgment filed by defendants Korzen,

Keane, Semrow, Cullerton, Barrett 189

Plaintiff’s reply brief to Motion for Sum-

mary Judgment and Supporting brief of

defendants Korzen, Keane, Semrow, Cul-

lerton, Barrett 203

Order of Judge Walter Dahl granting in

part and denying in part both Plaintiff

and Defendants’ Motions for summary

judgment and declaring the Revenue Act

of Illinois as amended by Article IX-A’

to be unconstitutional.under the four-

teenth amendment 223

Notice of Appeal filed by defendant Lehn-

hausen 228

Notice of Cross-Appeal filed by Plaintiff

Lake Shore Auto Parts Co. 11

Petition for Declaratory Judgment filed by

Clemens K. Shapiro et al., Shapiro v. Bar-

rett, et al., Case No. 71 L 5745 265

Motoin of defendant Lehnhausen to Strike

and dismiss Petition for Declaratory

Judgment 282

5-19-71

5-28-71

6-10-71

6-10-71

6-10-71

6-11-71

5-10-71

5-12-71

5-12-71

5-15-71

3

Motion of defendants Barrett, Korzen,

Keane, Semrow and Cullerton to Strike

and Dismiss Petition for Declaratory

Judgment 291

Order of Judge Thomas Donovan granting

defendants’ Motions to Strike and Dismiss

Complaint as to all plaintiffs except Cle-

mens K. Shapiro and declaring Article

IX-A constitutional 299

Notice of Appeal filed by plaintiffs Jerome

Herman and Guy and Eugene Ross 315

Notice of Appeal filed by plaintiff M. Weil

and Sons, Inc. 318

Notice of Appeal filed by plaintiff Clemens

K. Shapiro 324

Notice of Appeal filed by Lake Shore Auto

Parts Co. | 249

Petition for Leave to File Complaint for

Declaratory Judgment and Other Relief

filed by Eugene L. Maynard, et al., May-

nard et al. v. Barrett, et al., Supreme

Court of Illinois No. 44308 4

Order allowing Petition for Leave to File

Complaint for Declaratory Judgment and

Other Relief, Maynard, et al. v. Barrett, |

et al. 5

Order consolidating Maynard, et al. v. Bar-

rett, et al., Number 44308 with Lake Shore

Auto Parts Co. v. Korzen et al., Case No.

44199 6

Complaint for Declaratory Judgment and

Other Relief filed, Case Nos. 44308, 44199 7

6-11-71

7- 9-71

7- 9-71

7-29-71

7-30-71

8- 6-71

8-24-71

4

Order consolidating Shapiro et al. v. Bar-

rett, et al., Case Number 44432 with Lake

Shore Auto Parts Co. v. Korzen, Case

Number 44199 and Maynard v. Barrett,

Case Number 44308 59

Opinion of the Supreme Court of Illinois

Lake Shore Auto Parts Co. v. Korzen,

Number 44199; Maynard v. Barrett,

Number 44308; Shapiro v. Barrett, Num-

ber 44432 : 330

Dissenting Opinion of Mr. Justice Davis 354

Petition for Rehearing filed on behalf of

Plaintiffs in Maynard, et al. v. Barrett,

et. al. 370

Petition for Rehearing filed on behalf of

Defendant-Appellant Lehnhausen 371

Petition for Rehearing filed on behalf of

Defendants-Appellants Barrett, Korzen,

Keane, Semrow and Cullerton 372

Order denying Petitions for Rehearing 373

i)

ORDER OF THE SUPREME COURT OF

ILLINOIS

DENYING PETITIONS FOR REHEARING

UNITED STATES OF AMERICA

State of Ilinois ?

Supreme Court ” eee

)

At a Term of the Supreme Court, begun and held in

Springfield, on Monday, the tenth day of May in the year

of our Lord, one thousand nine hundred and seventy-one,

within and for the State of Ilinois.

Present: Ropert C. Unperwoop, Corer JUSTICE

Justice WALTER V. SCHAEFER

Justice DanteL P. Warp

JUSTICE JOSEPH LDENHERSH

Justicz THomas KE. Kiuczynsk1

Justice CuHarLes H. Davis

Justice Howarp C. Ryan

Wuuum J. Scorr, Arrorney GENERAL

Rosert G. Mitey, MarsHau

Attest: Justice Tarr, CLERK

Be It Remembered, that, to-wit: on the 24th day of

August, A.D. 1971, the same being one of the days in va-

cation after the term of Court aforesaid, the following

proceedings were, by said Court, had and entered of

record, to-wit:

Lake Shore Parts Co., et al., etc.,

Appellees

Nos. 44199, 44308, 44432, Cons.

v.

Bernard J. Korzen, etc., et al.,

Appellants

Appeal from Circuit Court Cook County

6

And now, on this day, the Court having duly considered

the petitions for rehearing filed herein, and being now

fully advised of and concerning the premises, doth over-

rule the prayer of the petitions and denies the petitions

for rehearing.

APPENDIX

Nos. 44199, 44308, 44432

Supreme Court of Illinois

July 9, 1971

Rehearing Denied Aug. 24, 1971

LAKE SHORE AUTO PARTS CO., et al.,

Appellees,

’

Vv.

BERNARD J. KORZEN, County Treasurer and ex officio

County Collector of Cook County, et al.,

Appellants.

EUGENE L. MAYNARD et al.,

Petitioners,

v.

EDWARD J. BARRETT, County Clerk of Cook County,

et al.,

Defendants.

CLEMENS K. SHAPIRO et al.,

Appellants.

Ve

EDWARD J. BARRETT, County Clerk of Cook County,

et al.,

Appellees.

SCHAEFER, Justice.

These consolidated cases present issues concerning the

construction and the validity of article IX-A which was

added to the constitution of 1870 by referendum vote at

the November 1970 election. On June 30, 1969, the Senate

and the House of Representatives concurred in the adop-

tion of Senate Joint Resolution No. 30, which provided

for the submission of the proposed amendment to a refer-

endum vote. Senate Joint Resolution No. 30 (Senate Jour-

nal, June 30, 1969, p. 3476) is as follows:

-“SENATE JOINT RESOLUTION NO. 30

Resolved, By the Senate of the Seventy-sixth Gen-

eral Assembly of the State of Illinois, the House of

Representatives concurring herein, that there shall

be submitted to the electors of the State for adoption

or rejection at the next election of members of the

general Assembly of the State of Illinois, in the man-

ner provided by law, a proposition to add Article

IX-A to the Constitution, the added Article to read

as follows:

ARTICLE IX-A

Section 1. Notwithstanding any other provision of

this Constitution, the taxation of personal property

by valuation is prohibited as to individuals.

SCHEDULE

Paragraph 1. This amendment shall become effee-

tive January 1, 1971.’’

The explanation of the amendment which appeared

upon the referendum ballot is as follows: