Appendix — Lehnhausen v. Lake Shore Auto Parts Co.

“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 re-

sult by adding a new article to the Constitution of

1870, Article TX-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

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

1970, p. 6) which contained a further statement of the

intention 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 Seventy-sixth Gen-

eral Assembly of the State of Illinois, the House of

Representatives concurring herein, that, in adopting

Senate Joint Resolution No. 30, which submits to the

electors of this State a constitutional amendment pro-

hibiting the taxation of personal property by valua-

tion 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 Assem-

bly intended to mean a natural person, or two or

more natural persons as joint tenants or tenants in

common.” ing

The first of the three consolidated actions that are be-

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

ration, 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 be-

half 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 [X-A violates the fourteenth amendment to the

constitution of the United States because its effect “is to

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 en- ”

tities which are not ‘individuals’ within the meaning of

said Article [X-A.’’? The complaint prayed for a decree

“finding and declaring that the provisions of the Revenue

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

Constitution of Illinois, are unconstitutional, invalid and

unenforceable insofar and to the extent that such statute

purports to impose ad valorem taxes with respect to per-

sonal property owned by plaintiff and all corporations

and other ‘non-individuals’ who are members of the class

which plaintiff represents.” An injunction, as well as re-

lief appropriate 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

allegations that related to the representative character

10

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

jurisdiction to determine the class aspect of the action.

The order also found that article IX-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

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 case. The complaint, which sought a declara-

tory judgment and other relief, alleges the adoption of

article IX-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 es-

sential for a full determination of the important revenue

question. *** Without the presence of Eugene L. May-

nard, neither the presence nor the position of a natural

person will be adequately 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 al-

11

leged that it was filed on behalf of the named public

bodies for themselves and all other public bodies which

receive proceeds from personal 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 article IX-A. “The pleadings of that ease place into

question only certain sections of the Illinois Revenue Act.

The attack is made upon these sections as affected by

the passage of Article IX-A rather than upon the consti-

tutionality of the Article itself. *** If the Court con-

siders the Lake Shore case without additional parties

and arguments, it may be foreclosed from ruling’ 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 ques-

tions and filed a brief to stand as his answer in this case.

The brief on behalf of the defendant county officers ap-

pears similarly to have been intended to stand as a mo-

tion to dismiss the complaint.

Another action was instituted by a complaint for decla-

ratory judgment which was filed in the circuit court

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

plaintiffs. 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.

12

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

similarly situated. The defendants are those State and

county officers who were named in the Lake Shore com-

plaint. The complaint alleges the adoption of article IX-A

and asserts various interpretations of that article, some

of which are 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 Government 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 determination of the cases already pending before

the Supreme Court. No order was entered with respect

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 plaintiff had standing to bring the action in its

own behalf and was a proper representative of the class

18

he purported to represent. The order found that article

IX-A “is free of the ambiguity and uncertainty of intend-

ment) charged by the plaintiffs, and that its intendment

is clearly declared to prohibit the taxation 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.” Except as

to the plaintiff Clemens K. Shapiro and members of his

class, the complaint was dismissed. All of the plaintiffs

in the Shapiro case have appealed from this judgment.

[1] The plaintiffs in the Maynard and Shapiro cases

justify the institution of their actions upon the ground

that there are deficiences as to parties and as to legal

propositions in the Lake Shore case which might, with-

out the assistance which they volunteer to supply, pre-

clude 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

legislative classification be made parties to an action

challenging the validity of that classification is apparent.

Major cases involving discrimination of the sort here al-

leged have not required the presence, as parties, either in

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

Lawrence v. State Tax Comm. of State of Mississippi

(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, 230 N.E. 2d 831.) Additional class actions were

not necessary to place before the court all pertinent

14

legal theories. We shall, however, consider 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 IX-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 Illi-

nois *** which imposed such personal property taxes

as to property owned by corporations and other ‘non-in-

dividuals.’ ’’

One alternative construction, advanced by the plain-

tiffs in the Shapiro case, is that the “Illinois’ Constitu-

tionof 1870, as amended by the addition of Article IX-A,

specifically prohibits, and declares to be unconstitutional

the imposition in Illinois of the property taxes imposed by

Article 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 TX-A is clearly concerned only with

the taxation of personal property, and by concentrating

upon the fact that the last sentence in the official ex-

planation which appeared upon the ballot at the election

of November 3, 1970, when article IX-A wus 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 effect the same tax levied against corpora-

tions and other entities not considered in law to be

individuals. The amendment would achieve this re-

15

sult by adding a new article to the Constitution of

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

sions of 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.”

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

individuals” is printed in italics in article IX-A, the

Maynard plaintiffs turn to materials other than the legis-

lative explanations in a search for a technical meaning.

They say: “The unusual circumstance that the words ‘as

to individuals’ are italicized. in the constitutional amend-

ment, an unprecedented practice in constitutional draft-

ing, strongly suggests that the General Assembly, in

drafting Senate Joint Resolution No. 30 used the word

‘individuals’ as one having’ established technical signifi-

cance 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, ad-

ministratively prescribed, have been used for personal

property tax returns. One form is to be used by “individ-

uals, partnerships, and unincorporated associations own-

ing 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 business (other than agriculture) ***.” The other

form is to be used by “[p]roprietorships, partnerships

and unincorporated associates engaged in business (other

16

than agriculture) ***.” On the assumption that the

word “individuals” was intended to have an established

technical 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

italics. When Senate Joint Resolution No. 30 was origin-

ally introduced on April 29, 1969, the proposed article

IX-A read as follows: “Notwithstanding any other provi-

sion of this Constitution, the taxation of personal prop-

erty by valuation is prohibited.” (Senate Journal, April

29, 1969, p. 1038.) On May 15, 1969, Senate Joint Resolu-

tion No. 30 was amended “by striking the period and add-

ing the following: ‘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 italic-

ized. The rules of the Senate of the 76th General Assem-

bly provided: “All resolutions originated in the Senate

proposing amendments to the Constitution shall be or-

dered 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 mat-

ter in italics and omitted or superseded matter enclosed

in brackets 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 “individ-

uals” should be given an artificial meaning. The official

17

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

Shapiro plaintiffs have referred, but have found nothing

which persuades us that the words of article IX-A should

be given anything other than their natural meaning.

We conclude that the meaning of article EX-A is that

ad valorem taxation of personal property owned by a

natural 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 article [X-A, so construed, violates the equal protec-

tion clause of the fourteenth amendment to the constitu-

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

the Revenue Act, which must be regarded as amended by

article [X-A, rather than the article itself, which violates

the equal-protection clause. We shall first consider the

basic question of the validity of the discrimination ef-

fected by article IX-A.

The new article classifies personal property for the pur-

pose of imposing a property tax by valuation, upon a

basis that does not depend upon any of the characteris-

tics 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 owied by B, it cannot be taxed. Of course the

equal-protection clause of the fourteenth amendment does

not prohibit classification, and absolute precision is not

required of the States in drawing the lines between class-

“es. Nevertheless, a State may not, under the guise of

classification, arbitrarily discriminate against one and in

favor of another similarly situated.

18

The Supreme Court of the United States has thus de-

scribed the governing principles:

“Of course, the State, in the exercise of their taxing

power, are subject to the requirements of the Equal

Protection Clause of the Fourteenth Amendment. But

that clause imposes no iron rule of equity, 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 uniformity with reference to composition,

use or value. Bell’s Gap R. Co. v. Commonwealth of

Pennsylvania, 134 U.S. 232, 237, 10 S. Ct. 533, 535, 33

L. Ed. 892; Magoun v. Illinois Trust & Savings Bank,

170 U.S. 283, 293, 18 S Ct. 594, 598, 42 L. Ed. 1037;

*** State Board of Tax Com’rs of Indiana v. Jack-

son, 283 U.S. 527, 537, 51 S. Ct. 540, 543, 75 L. Ed.

1248. ‘To hold otherwise would be to subject the es-

sential ‘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 Fourteenth Amendment was

intended to assure.’ Ohio Oil Co. v. Conway, supra,

281 U.S., [146], at 159, 50 S. Ct. [310], at page 314

(74 L. Ed. 775].

“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

arbitrary. The rule often has been stated to be that

the classification ‘must rest upon some ground of

difference having a fair and substantial relation to

the object of the legislation.’ F. S. Royster Guano

Co. v. Commonwealth of Virginia, 253 U.S. 412, 415,

40 S. Ct. 560, 561, 64 L. Ed. 989; Lowisville Gas &

Electric Co. v. Coleman, 277 US. 32, 37, 48 S. Ct.

19

423, 425, 72 L. Ed. 770; Air-Way Electric Appliance

Corp. v. Day, 266 U.S. 71, 85, 45 S. Ct. 12, 15, 69 L.

Kd. 169; Schlesinger v. Wisconsin, 270 U.S. 230, 240,

46 S. Ct. 260, 261, 70 L. Ed. 557; Ohio Oil Co. v.

Conway, 281 U.S. 146, 160, 50 S. Ct. 310, 314, 74 L.

me Tie 8 e

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

522, 526-527, 79 S. Ct. 437, 440, 3 L. Ed. 2d 480, 484-485.

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 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. Penn-

sylvania, 277 U.S. 389, 406, 48 S. Ct. 553, 556, 72 L. Ed.

927, 932: “In other words, the equality clause requires

merely that the classification shall be reasonable. We call

that action reasonable which an informed, intelligent,

just-minded, civilized man could rationally favor. In pass-

ing upon legislation 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, specious, or fanciful, so that all actually situ-

ated similarly will be treated alike, that the object of the

classification must be the accomplishment of a purpose or

the promotion of a policy, which is within the permissi-

ble functions of the state, and that the difference must

bear a relation to the object of the legislation which is

substantial, as distinguished from one which is specula-

tive, remote, or negligible.”

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

erty taxation established pursuant to article IX of the

f 90

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

proportion to the value of his, her or its property * * *.”

(Const. of 1870, art. IX, Sec. 1.) Taxes levied by muni-

cipal corporations are required to be “uniform in respect

to persons and property, within the jurisdiction of the

body imposing the same.” (Const. of 1870, art. IX, sec. 9.)

The permissible exemptions from taxation are thus de-

scribed: “The property of the state, counties, and other

municipal corporations, both real and personal, and such

other property as may be used exclusively for agricul-

tural and horticultural societies, for school, religious,

cemetery and charitable purposes, may be exempted from

taxation; but such exemption shall be only by general

law ** *.” Const. of 1870 art» IX, sec. 3.

Against this background the incongruity of the pro-

hibition contained in article [X-A is apparent. It cannot

rationally be said that the prohibition promotes any pol-

icy 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

consideration, as is his status as sole proprietor, joint

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

ch. 106%, par. 25), limited partnership (Ill. Rev. Stat.

1969 ch. 10614, par. 61), member of a professional serv-

ice corporation (Ill. Rev. Stat. 1969, ch. 32, par. 415-1

et seq.), or of a professional association (Ill. Rev. Stat.

v

‘21

1969, ch. 106%, par. 101 et seq.; see Sup. Ct. Rule 721,

Tl. Rev. Stat. 1969, ch. 110A, § 721; 43 Tl. 2d R. 721).

[2] We hold therefore, that the discrimination pro-

duced by article [X-A violates the equal-protection clause

of the fourteenth amendment. Apart from that discrim-

ination, 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~af-

firmed; insofar as that judgment sustained the complaint

as to Clemens K. Shapiro, it is reversed and the cause is

remanded to that court with directions to dismiss the

complaint. In No. 44308 (Maynard), the complaint is dis-

missed.

No. 44199. Reversed and remanded with directions.

No. 44308. Complaint dismissed.

No. 44432. Affirmed: in part; reversed in part and re-

manded, with directions.

DAVIS, Justice (dissenting).

The majority opinion holds that our State constitution

of 1870, as modified by article TX-A, may not validly

classify exemptions from ad valorem personal property

taxation on the basis of the ownership of the property, -

and that such exemption may be made only upon a classi-

fication based upon the nature of the property or its use.

I dissent from this pronouncement.

“—

oe

22 ya

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 en-

joyed there, and so long’ as the tax is not so palpably

arbitrary or unreasonable as to infringe upon the equal

protection and due process requirements of the fourteenth

amendment. Lawrence v. State Tax Commission of Mis-

sissippi, 286 U.S. 276, 280, 52 S. Ct. 556, 557, 76 L. Ed.

1102, 1105.

The majority opinion recognizes that “the equal-protec-

tion clause of the foufteenth amendment does not pro-

hibit classification, and absolute precision is not required

of the states in drawing the lines 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 mule is

found in the quotation from Allied Stores of Ohio, Inc. v.

Bowers, 358 U.S. 522, 79 S. Ct. 487, 3 L. Ed. 2d 480, cited

by the majority. The rule has been expressed and ex-

emplified many times in varying terms. Examples are:

“Any classification of taxation is permissible which has

reasonable 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 judi-

cial decision, *** that the burden of establishing the

unconstitutionality of a statute rests on him who assails

it, and that courts may not declare a legislative discrim-

ination invalid unless, viewed in the light of facts made

known or generally assumed, it is of such a character as

to preclude the assumption that the classification rests

upon some rational basis within the knowledge and ex-

La

perience 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 con-

ceived to justify it.” (Metropolitan Casualty Ins. Co. v.

Brownell, 294 U.S. 580, 584, 55 S.Ct. 538, 540, 79 L. Ed.

1070, 1073); due process imposes no rigid rule of equality

in taxation, and irregularities resulting from singling out

one particular class for taxation or exemption infringe no

constitutional requirement. (Carmichael v. Southern Coal

& Coke Co., 301 U.S. 495, 509, 57 S. Ct. 868, 872, 81 L.

Ed. 1245, 1253); and it is only the invidious discrimina-

tion or classification which is*patently arbitrary and ut-

terly lacking in rational justification which is barred by

the due process or equal protection clauses. Flemming v.

Nestor, 363 U.S..603, 611, 612, 80 S. Ct. 1367, 1373, 4 L.

Ed. 2d 1435, 1445.

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

lative 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 persons similarly situated are treated alike, and per-

tinent citations, are found in 16A C.J.S. Constitutional

Law, §§ 520, 521, 649.

In this litigation as is often the case, the particular

expression of the rule which the majority of the court

chooses to rely upon may be dictated by the outcome

which the judges of the majority think to be proper. Be-

yond 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 illus-

trated by the statement of the Supreme Court in Law-

rence v. State Tax Commission of Mississippi, 26 U.S.

276, 284, 285, 52 S. Ct. 556, 559, 76 L. Ed. 1102, 1108:

e

24

“The equal protection clause does not require the

state to maintain a rigid rule of equal taxation, to

resort to close distinctions, or to maintain a precise

scientific uniformity; and possible differences in tax

burdens not shown to be substantial or which are

based on discriminations not shown to be arbitrary

or capricious, do not fall within constitutional pro-

. _ hibitions.”

The Supreme Court in Lawyence also stated that there

is no constitutional requirentent 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. 1102,

1107), and we have just recently held that for the pur-

pose of income taxation corporations may be placed in

one class and individuals in another and each taxed dif-

ferently. (Thorpe v. Mahin, 43 Ill. 2d 36, 250 N.E. 2d

633.) The language of the court at pages 45 and 46, at

page 638 of 250 N.E. 2d is worthy of repetition:

“Tt 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

requirements of the fourteenth amendment to the

United States constitution by creating multiple class-

_ es and discriminating unreasonably among them. This

contention is advanced specifically against the pro-

visions which tax corporations at a 4% rate and in-

dividuals, trusts, and estates at 214% rate.

“Both the equal protection argument and the uni-

formity argument depend on the reasonableness of

putting corporations in one class and individuals,

trusts, and estates in another class for purposes of

this tax. (See Grenier & Co. v. Stevenson, 42 Tll..2d

289, 247 N.E. 2d 606.) When the due-process conten-

tion has been advanced, this court, citing Supreme

Court cases, has stated: ‘It has long: been settled that

the power of the legislature to make classifications,

25

particularly in the field of taxation, is very broad,

and that the fourteenth amendment imposes no “iron

rule’’ of equal taxation.. [Citations.] The reasons

justifying the classification, moreover, need not-ap-

pear on the face of the statute, and the classifica-

tion 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. [Cita-

tions.]’ Department of Revenue v. Warren Petro-

leum Corp., 2 Ill. 2d 483, 489-490, 119 N.E. 2d 215.

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 persens taxed

and those not taxed. [Citations.]’ (Klein v Hulman,

34 Ill. 2d 343, 346-347, 215 N.E. 2d 268, 270.) ‘In

order to prevail on an allegation that a statute or

portion of a statute is unconstitutional, the plaintiff

has the burden of showing how the legislature has

violated the constitution.’ Grenier & Co. v. Stevenson,

42 Til. 2d 289, 291, 247 N.E. 2d 606, 608.

“In short, petitioners have the burden of showing

that the challenged classification is unreasonable.

Their only assertion is that ‘corporations are at a

disadvantage when they compete in the same type

of business with individual proprietorships or part-

nerships because of the rate differential.’ This asser-

tion 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. Ar-

buckle, 251 U.S. 352, 40S. Ct. 304, 64 L. Ed. 396),

and by this court (People v. Franklin National In-

surance Co. of New York, 348 Ill. 336, 175 N.E. 431;

Michigan Millers’ Mutual Fire Insurance Co. v. Mc-

Donough, 358 Tl. 575, 193 N.E. 662), where, for pur-

26

poses 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

income is property (Bachrach v. Nelson, 349 Ill. 579, 182

N.E. 909), and held that an income tax was not a prop-

erty tax. The significance of this determination was that

section 1 of article [IX of our Constitution of 1870) re-

quired 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 legisla-

ture might direct, so long as it was uniform as to each

“class.” Obviously, the legislature could not, under the

foregoing provisions, impose an income tax upon corpora-

tions at one rate and upon individuals at a lesser rate if

it were a tax on property. Our constitution then pro-

hibited any tax on property unless structured to be uni-

form 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 per-

27

sonal property of individuals, and the court should have

found no impediment to upholding the validity of article

IX-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 un-

common to the state. In the California Railroad Tax

eases (San Mateo County v. Southern Pacific R. Co., C.C.,

13 F. 722, appeal dismissed per stipulation, 116 U.S. 138,

6 S. Ct. 317, 29 L. Ed. 589; Santa Clara County v. South-

ern Pacific R. Co. C.C., 18 F. 385, aff'd other. grounds,

118 U.S. 394, 6 S. Ct. 1132, 30 L. Ed. 118), which held

that unequal taxation, based upon the character of the

owner, was forbidden by the fourteenth amendment, a

constitutioial provision requiring uniformity of taxation

was involved. Even though the California constitution

specified that all property be taxed in proportion to its

value, laws of the State 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 purposes. The

trial court quite properly held that this method of valua-

tion, as to railroads only, was improper under the cir-

cumstances, and the United States Supreme Court af-

firmed the lower court on a nonconstitutional basis with-

out reaching the constitutional question. The California

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 ysed in the fourteenth amendment, included

corporations. Apparently, the latter point had a strong

bearing on the expressions found in these cases.

In the case at har, by virtue of the adoption of article

IX-A, there is no constitutional requirement that taxes

S

28

on personal property be uniform as to individuals and

corporations so that each pays a tax in proportion to the

value of his or its property. Article [X-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 attempt-

ing to discriminate between individuals and corporations

in the face of a constitutional provision prohibiting such

discrimination. Here the question for determination is

whether, absent the requirement of.a State constitution

that corporate and individual personal properties be taxed

the same, the equal protection clause of the fourteenth

amendment permits them to be taxed differently. I be-

lieve that it does!

Without the constitutional requirement of uniformity

on the taxation of properties, there is no reason or justi-

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

erty taxation may not be classified on the basis of own-

ership 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 IX

of the constitution of 1970 relates to revenue, and section

5 therefore pertains to personal property taxation. Sub-

section (a) thereof provides that the legislature “may

classify personal property for purpose of taxation by

valuation, abolish such taxes on any or all classes and

authorize the levy of taxes in lieu of the taxation of

personal property by valuation.” (Emphasis ours.) With-

out more, it could be said that the word, “classes” refers

only to classes of property, but subsection (c) refers to

the abolition of all ad valorem personal property taxes

by January 1, 1979, and the replacement of the lost rev-

29

4

enue, and provides: “Such revenue shall be replaced by

imposing statewide taxes, other than ad valorem taxes

on real estate, solely on those classes relieved of the

burden of paying ad valorem personal property taxes

because of the abolition of such taxes subsequent to Jan-

uary 2, 1971.” (Emphasis ours.) Obviously, the word,

“classes” as there used, does not refer to classes of prop-

erty; it refers to classes of property owners and provides —

for taxation according to the character of the owner. If

the majority opinion is to stand and article IX-A held

to be unconstitutional, then under consistent application

of its rationale, 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 Pennsy]l-

vania, 277 U.S. 389, 48 S. Ct. 553, 72 L. Ed. 927. I be-

lieve 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 observations which are particularly apropos

here. The court had under consideration a tax on the

gross receipts of corporate taxicab companies where no

similar tax was imposed upon the receipts of individuals

who operated taxicabs. The majority held that the clas-

sification was based solely upon the character of the own-

er, and that it violated the fourteenth amendment.

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

/ S. Ct. 553, 555-558, 72 L. Ed. 927, 931-934, Mr. Justice

' Brandeis observed that the tax applied equally to all

corporations foreign 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 corpora-

30

tions engaged exclusively in intrastate commerce,

than upon individuals engaged under like circum-

stances in the same kind of business? The narrower

question presented is whether this heavier burden

may be imposed by a form of tax ‘not peculiarly

applicable to corporations’; that is, by a tax of such

a character that it might have been extended to in-

dividuals if the Legislature had seen fit to do so.”

He then pointed out that the difference between a busi-

ness carried on in corporate form and one carried on by

natural persons is “a real and important one.’’ He ob-

served that the discrimination was not based upon any

difference in the source of income or in the character of

the property employed, and stated the obvious: that the

requirement that a classification must be reasonable does

not imply that the policy embodied in the classification

must be deemed by the court to be a wise one. He con-

cluded that a state is permitted to impose upon corpo-

rations 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 Tll. 2d 36, 250 N.E. 2d 633. We recognized

what we called the obvious advantages of carrying on a

business in the corporate form. The privilege of carrying

on a business in this form has many advantages: the

corporate ownership of business, freedom from personal

liability for corporate obligations, continuity of existence,

etc. There we acknowledged that there are sufficient

differences between the privilege of earning or receiving

income as a corporate entity and that of earning or re-

ceiving 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

31

individual property owner. The fact that the corpora-

tion may in some respects be placed at a disadvantage

in its competition with individuals owning similar prop-

erty and engaged in the same business should not cor-

demn the classification as unreasonable. Thorpe v. Mahin,

at p. 46, 250 N.E. 2d 633.

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 reported. The article [X-A constitutional amend-

ment creates a classification based upon the distinctions

inherent between corporations and individuals—a distince-

tion 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

administration of the personal tax collections in this State

are known to everyone. That these inequities apply with

equal force to corporate taxpayers and individual tax-

payers may, or may not, be totally true. The desire and

purpose of systematically eliminating this archaic form

of taxation are apparent from the actions of the people

and the legislature of the State. The General Assembly,

which drafted and adopted Senate Joint Resolution No.

30, had previously at the same legislative session already

exempted from such taxation, household furniture and

one automobile, per household, if used for personal plea-

sure. (Ill. Rev. Stat. 1969, ch. 120, para. 500.21a.) The

article IX-A amendment was overwhelmingly ratified by

the people of the State. The constitution of 1970, like-

wise adopted by the vote of the people, expressed con-

cern over the form and use of personal property taxa-

32

tion. The newly-adopted constitution prohibits the rein-

statement of any ad valorem personal property tax abol-

ished before January 1, 1971, the effective date of the new

constitution. This provision refers to the personal prop-

erty tax as to individuals which was abolished by article

IX-A, and the majority opinion runs counter to this con-

stitutional prohibition in that it reinstates the personal

property tax as to individuals. In addition, the new con-

stitution 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 mis-

chief sought to be remedied and the purpose to be accom-

plished by the article IX-A amendment :(Wolfson v.

Avery, 6 Ill. 2d 78, 88, 126 N.E. 2d 701.) Likewise, the

court should memorialize the salutary rule of law that an

amendment to a State constitution should be deemed vio-

lative of the Federal constitution only where the asserted

constitutional rights cannot otherwise be protected and

effectuated. Reynolds v. Sims, 377 U.S. 533, 584, 84 S. Ct.

1362, 1393; 12 L. Ed. 2d 506, 540.

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 classi-

fication found in the article [IX-A amendment does not

constitute an invidious discrimination; that it seeks to

accomplish and promote a valid policy expressive of the

will of the people and the intent and purpose of the legis-

lature; and that the distinction upon which the classifi-

cation for exemption is based does not overstep the limi-

tations imposed by the fourteenth amendment.

33

IN THE CIRCUIT COURT OF COOK COUNTY,

ILLINOIS COUNTY DEPARTMENT,

CHANCERY DIVISION

LAKE SHORE AUTO PARTS)

CO., an Illinois corporation, on its

own behalf and also as representa-

tive of a class of corporations and

other ‘“non-individuals”, which

class is herein described,

: Plaintiffs,

Vs.

BERNARD J. KORZEN, County

Treasurer and ex-officio County

Collector of Cook County, GEOR- NO. 70 CH 5123

GE E. KEANE and HARRY S&S.

SEMROW, Members of the Board

of Appeals of Cook County, P. J.

CULLERTON, County Assessor of

Cook County, EDWARD J. BAR-

RETT, County Clerk of Cook

County, and ROBERT J. LEN-

HAUSEN, Director, Department of

Local Government Affairs of the

State of Illinois. E

SO ONT Pe SOT LE

ORDER

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. LENHAUSEN, Director, Depart-

34

ment of Local Government Affaire of the State of Illinois,

by and through the Attorney General of Illinois, and the

Cross-motion For Summary Judgment of defendants KOR-

ZEN, 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

arguments 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 roll now being prepared by the assessing

officials of Cook County for the tax year 1970; that the

plaintiff has standing to bring this action on its own be- »

half, 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.

3. That an amendment to the Illinois Constitution of

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

35

people of Illinois at a referendum held on November

7, 1970, and such amendment, by its terms, became ef-

fective January 1 1971; that said Article IX-A purports

to prohibit the taxation of personal property by valua-

tion as to “individuals”, and only as to “individuals”,

while leaving unaffected those provisions of the Illinois

Constitution and the Revenue Act of Illinois (Ill. Rev.

Stat. 1969, ch. 120, § 482 et ‘seq.) which impose such

personal property taxes as to property owned by corpora-

tions 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-

eally 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 IX-A of the Illinois Constitution, deprives

the plaintiff corporation of the equal protection of the

laws guaranteed by the Fourteenth Amendment to the

Constitution of the United States; that said Revenue Act

of Illinois, to the extent that it purports to impose per-

sonal property taxes with respect to the property owned

by plaintiff, is therefore unconstitutional, void and of no |

effect whatsoever.

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

applicable with respect to personal property taxes im-

posed by the Revenue Act of Illinois for the year 1970,

the assessment date for which was April 1, 1970, and the

assessment of which had been commenced prior to Janu-

36° /

ary 1, 1971, the effective date of Article [X-A, notwith-

standing that such assessment had not been completed

as of that date:

1T IS THEREFORE ORDERED, ADJUDGED AND

DECREED THAT:

7. The plaintiff's Motion For Summary Judgment is

granted in part and denied in part, the Court declaring

that the Revenue Act of Illinois (Ill. Rev. Stat. 1969, ch.

120, §§ 482 et seq.), said Revenue Act having been amend-

ed by Article IX-A of the Illinois Constitution, is viola-

tive of the Fourteenth Amendment to the Constitution

of the United States and is held to be void and unen-

forceable insofar as said Revenue Act purports to impose

personal property taxes on plaintiff.

8. The defendants’ Cross-motions For Summary Judg-

ment are granted in part and are denied in past, the-

Court declared that Article IX-A of the Tllinois Consti-

tution is not applicable to, and does not impair the collec-

tion of, personal property taxes igfposed by the Revenue

Act of Illinois, the assessment of Which were cammeériced

prior to January 1, 1971. \

9. Except for those matters adjudicated by siskaunnlen

7 and 8 of this Order, this Court retains jurisdiction of

this cause for all purposes.

10. Pursuant to Rule 304(a) of the Rules of the Su-

preme Court of Illinois, the Court expressly finds that

there is no just reason for delaying enforcement or ap-

peal 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

37

manifest public importance of the issues and the sub-

stantial amount of tax revenues that are involved.

eereereer eee eee eeeereer eee eewmeeeeee

Ps udge, Circuit Court of Cook

County, Illinois.

38

STATE OF ILLINOIS] ..

COUNTY OF COOK {|

IN THE CIRCUIT COURT OF COOK COUNTY,

ILLINOIS COUNTY DEPARTMENT,

TAX DIVISION

CLEMENS K. SHAPIRO, JER-)

OME HERMAN, d/b/a THE

SPOT, GUY S. ROSS AND EU-

GENE D. ROSS, d/b/a GUY S&S.

ROSS & CO., a partnership; and /

M. WEIL AND SONS, INC., an ®

Illinois Corporation, all individual-

ly and in representative capacity,

a Plaintiffs, »

VS.

EDWARD J. BARRETT, County No. 71 L 5745

Clerk of Cook County; BERNARD f

J. KORZEN, County Treasurer

and ex-officio County Collector of

Cook County; GEORGE E.

KEANE and HARRY H. SEM-

ROW, Members of the Board of

Appeals of Cook County; P. J.

CULLERTON, County Assessor of

Cook County, and ROBERT J.

LEHNHAUSEN, Director, Depart-

ment of Local Government Affairs

of the State of Illinois,

Defendants. :

39

ORDER

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 ac-

tion was filed by, plaintiffs for themselves and in a repre-

sentative capacity on behalf of all other persons similarly

situated. The cause comes on for hearing on separate mo-

tions, to strike and dismiss that complaint, filed by Coun-

ty 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, citi-

zen and taxpayer of the State of Illnois, 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, operates 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 per-

sons, citizens and residents of the State of Illinois,

both of whom are partners, and as partners operate ‘

and conduct a business as a partnership duly organ- ;

ized under the laws of the State of Illinois, which :

business 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

40

of Illinois, is located in, aid 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 IXA to the Illinois Constitu-

tion of 1870. This amendment became part of the Illinois

Constitution on November 25, 1970, and reads as follows:

“Article [IX-A

TAXATION OF PROPERTY

Ҥ 1. Taxation of personal property prohibited. Sec-

tion 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 IXA, specifically

prohibits, and declares to be unconstitutional the imposi-

tion, in Illinois, of the property taxes imposed by Article

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.

41

All plaintiffs contend that if Article [XA does not pro-

hibit the taxation of all property, then Article [XA pro-

hibits the tax to be measured by the value of the prop-

erty taxed.

All plaintiffs contend that the prohibition of Article

IXA, which abolishes the imposition of property tax

measured by valuation of the property taxes, extends to

those taxes so measured where the assessment of plain-

tiffs’ property has been commenced by defendants prior

to, even though not completed on January 1, 1971, the

effective date of Article IXA, and payment due there-

after. °

Natural Persons contend that:

The designation “individuals” in Article [XA properly

and validly describes, is intended to apply, and does ap-

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

hibited in Article IXA, 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 TXA prohibits taxation, by valuation of person-

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

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

al under both Illinois Constitution and the Constitution

of the United States.

Both business entities and corporations contend that:

Article [XA, effective January 1, 1971, as an amend-

ment to Illinois Constitution of 1870 is offensive to the

Constitution of the United States.

If the designation “individuals” in Article [XA in-

vokes prohibition of taxes by valuation on personal prop-

erty exclusively as to “natural persons” and personal

42

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

between users of identical property and the use to which

the 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

special legislation prohibited by Article IV, Section 22-of

Tllinois Constitution, as well as denying to business en-

tities and corporations due process of law and the equal

protection of the law guaranteed to them by Article II,

Section 2 of the Illinois Constitution, and the Fourteenth

Amendment to the Constitution of the United States.

Unless the exclusion of property owned by “individ-

uals” is construed to exclude the property of business

entities and ‘corporations, as well as that of natural per- .

sons, then the employment in Article IXA of the term —

“individuals” is so vague, uncertain, and incapable of

definitive application to the context ‘of Article IX, that

Article IXA must fall because it is totally absent the

comprehension required, especially of constitutional pro-

visions, by both Illinois Constitution and the Constitu-

tion of the United States.

Business entities contend that:

(a) The designation “individuals” in Article IXA

correctly and properly described, and is intended to ap-

ply to, and does include business entities which own

property because the natural person owners of that busi-

ness entity are personally and individually liable for the

payment of that tax.

ee 43

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 con-

stitutional under both Illinois’ Constitution and the Con-

stitution of the United States.

Corporations contend that:

If the designation “individuals” in Article IX-A ap-

plies to any or all owners of property except corporate

owners of property, then such classification is discrimin-

atory, unreasonable, and offensive to both the Illinois’

Constitution and thé 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 property which is used by them for the personal

judgment 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 argument 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 provi-

sions of Chapter 110, Section 57.1 (Declaratory Judg- |

ments), 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 representa-

tive of. his class.

P er

44

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 IX-A of the Illinois Constitution of

1870 is valid, constitutional and immune to all of the

plaintiffs’ assaults, both under the Mllinois Constitution

and the Constitution of the United States.

5. 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 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 relat-

ing 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 is-

sues raised by plaintiff Clemens K. Shapiro and mem-

bers of his class involving personal property owned and

used by them for the personal enjoymént of themselves

and their families.

45

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

preme Court of “Illinois, the Court expressly finds that

there is no just reason for delaying enforcement or ap-

peal 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 sub-

stantial amount of tax revenues that are involved.

WHEREFORE, IT IS ORDERED, ADJUDGED and

DECREED that defendants’ motions to strike and dis-

miss are sustained as to all plaintiffs, except the plain-

tiff Clemens K. Shapiro and members of his class, and

plaintiffs’ Complaint is stricken as to all issues and in

all regards and respect contrary to and in variance

with the judgment of this Court; that Amending Article

IX-A of the Illinois Constitution is valid and constitu-

tional 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 [X-A declares its prohibition exclu-

sively as to any personal property tax on the personal

property owned by individuals and used for their per-

sonal enjoyment and that of their families.

ENTER:

THOMAS C. DONOVAN,

Presiding Judge, Tax Division,

Circuit Court of Cook County,

Illinois.

Date: May 27, 1971.