Appendix — Lehnhausen v. Lake Shore Auto Parts Co.

A8

Ross allege that they are natural persons and oper

as a partnership, a business which owns property, ¥

Weil and Sons, Inc., a corporation, alleges that it is th

owner of property situated in Cook County.

The complaint alleges that each of the plaintiffs is ag.

ing in a representative capacity on behalf of all othe,

similarly situated. The defendants are those State any

county officers who were named in the Lake Shore con.

plaint. The complaint alleges the adoption of article IX.4

and asserts various interpretations of that article, som

of which are advanced by all of the plaintiffs and other

by one or another of the plaintiffs. To this complaint th

defendant Lehnhausen, ‘Director of the Department of

Local Government Affairs, filed a motion to dismiss o

May 9, 1971. He also filed a “Petition for Instruction’

which recited that the Lake Shore and Maynard case

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 tim

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 determmation of the cases already pending befor

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 tha

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

"7

i

i a a a a ed le ee — a nad

|

A9

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 deficiencies 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 whick 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 [X-A of the

Constitution of 1870.” (See Hux v. Raben (1967), 38 Ill.

9d 223, 230 N.E. 2d 831.) Additional class actions were

not necessary to place before the court all pertinent

Al0

legal theories. We shall, however, consider the arguments

advanced by counsel in those cases.

Neither the plaintiffs in the Maynard case nor those ip

the Shapiro case are content with the interpretation of

article IX-A arrived at by Judge Walter P. Dahl in th

Lake Shore case. That interpretation was that the ney

‘Article “purports to prohibit the taxation of personal

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

‘individuals’, while leaving unaffected those provisions

of the Illinois Constitution and the Revenue Act of Iii.

nois * * * which imposed such personal property taxes

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

dividuals.’ ’’

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, speci.

fically prohibits, and declares to be unconstitutional the

imposition in IHinois 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

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

owner.’’ This construction is achieved by disregarding

the fact that article IX-A is clearly concerned only with

the taxation of personal property, and by concentrating

upon the fact that the last sentence in the official explana.

tion which appeared upon the ballot at the election of

November 3, 1970, when article [X-A was approved, men-

tioned 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 corpors-

.tions and other entities not considered in law to be

’ individuals. The amendment would achieve this r

All

sult by adding a new article to the Constitution of

1870, Article IX-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

sndividuals’ 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 m ing 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) e © 6° The other

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

and unincorporated associates engaged in business (other

Al2

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 Resolv-

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

A13

explanations, which are not discussed in the Maynard

prief, 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 [X-A should

be given anything other than their natural meaning.

We conclude that the meaning of article IX-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 IX-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 IX-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 [X-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-

ties 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 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 classi-

fication, arbitrarily discriminate against one and in favor

of another similarly situated.

S

Al4

_ The Supreme Court of the United States has thusde.

cribed the governing principles:

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

power, are subject to the requirements of the Iquj

Protection Clause of the Fourteenth Amendment. By

that clause imposes no iron rule of equality, prolibit.

ing the flexibility and variety that are appropia

to reasonable schemes of state taxation. The Stat

may impose different specific taxes upon diffrent

trades and professions and may vary the rat of

excise upon various products. It is not requird ty

resort to close distinctions or to.maintain a prise

scientific uniformity with reference to compostion,

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

Pennsylvania, 134 U.S. 232, 237, 10 S. Ct. 533, 53, 3

L. Ed. 892; Magoun v. Illinois Trust € Savings lank,

170 U.S. 283, 293, 18 S. Ct. 594, 598, 42 L. Ed. :037,

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

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

1248. ‘To hold otherwise would be to subject th «

sential taxing power of the State to an intoleabk

supervision, hostile to the basic principles of ow

government and wholly beyond the protection vhich

the general clause of the Fourteenth Amendment was

intended to assure.’ Ohio Otl 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 Cliuse.

The State must proceed upon a rational basis and

may not resort to a classification that is paljably

arbitrary. The rule often has been stated to be that

the classification ‘must rest upon some grouni of

difference having a fair and substantial relation to

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

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

- 40S. Ct. 560, 561, 64 L. Ed. 989; Lowitsville Gis ¢

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

Al5

y 4

493, 425, 72 L. Ed. 770; Air-Way Electric Appliance

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

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

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

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

“7°.

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

592, 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-

feation 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.

997, 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 furctions 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

a a ee eee oe oe ee a — ee, ee — Se 2.

Fass Seas a P

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Al6

constitution of 1870, which, with respect to Property

taxes, contemplates the levy of “a tax, by valuation, »

that every person and corporation shall pay a tax ip

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

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

cipal corporations are required to be “uniform in respect

to persons and property, within the jurisdiction of th

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

The permissible exemptions from taxation are thus des.

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

municipal corporations, both real and personal, and such

other property as may be used exclusively for agricql.

tural and horticultural societies, for school, religion,

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 IX-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. 10614, 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. 4151

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

Al7

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

ll. Rev. Stat. 1969, ch. 110A, § 721; 43 Ill. 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 [X-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 E. 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 IX-A, may not validly

dassify 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,

A18

It is clear that the United States Constitution impoge

no particular modes of taxation upon the states anj

leaves them unrestricted in their power to tax thom

domiciled within their borders so long as the tax imposed

is upon property within the State, or on privileges e.

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

arbitrary or unreasonable as to infringe upon the equ)

protection and due process requirements of the fourteenth

amendment. Lawrence v. State Tax Commission of Migs.

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

1102, 1105.

The majority opinion recognizes that “the equal-protee.

tion clause of the fourteenth amendment does not pr.

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 rule is

found in the quotation from Allied Stores of Ohio, Inc. 1.

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

by the majority. The rule has been expressed and er.

emplified many times in varying terms. Examples ar:

“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 jud-

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 ¢x-

eS ee ee ee ee

—: 2 ee

_ aoe a Sl ae ae. ee” lc oe. ee Se Se" ee we Fe ae eae Ct

‘A19

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

é 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. 608, 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 Lawr-

ence v. State Tax Commission of Mississippi, 286 US.

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

A20

“The equal protection clause does not require th

state to maintain a rigid rule of equal taxation,

resort to close distinctions, or to maintain a pregig

scientific uniformity; and possible differences in tay

burdens not shown to be substantial or which ap

based on discriminations not shown to be arbi

or capricious, do not fall within constitutional pp.

hibitions.”

The Supreme Court in Lawrence also stated that ther

is no constitutional requirement that a system of taxation

should be uniform as applied to individuals and corpom.

tions, regardless of the circumstances in which it operates

(286 U.S. 276, 283, 52 S. Ct. 556, 558, 76 L. Ed. 110,

1107), and we have just recently held that for the pw.

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 NE. &

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

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

“It is next contended that the Act violates the mi.

formity provision of section 1 of article IX of ow

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 wi-

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 Grenter & Co. v. Stevenson, 42 Ill. M

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,

a eS a) |e

be Bi

ee ee. Oe a ee ee eT

' A21

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 persons 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, 40 S. Ct. 304, 64 L. Ed. 396),

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

surance Co. of New York, 343 Ill. 336, 175 N.E. 431;

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

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

A22 /

poses of the tax in question, corporations were placaj

in one class and individuals in another and each wen

taxed differently.’’

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

the classification for exemption or taxation may not ly

based upon the character of the ownership, but only upm

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

the opinion that the classification may not be based upon

the corporation—individual distinctions whch we upheld

in Thorpe.

In Thorpe this court reversed its prior holding that

income is property (Bachrach v. Nelson, 349 Ill. 579, 19

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) n

quired the levying of a tax “by valuation, so that every

person and corporation shall pay a tax in proportion t

the value of his, her or its property * * *.” At the sam

time, the constitutional provisions permitted a tax upon

franchises and privileges in manner as the legish.

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

“elass.’’ Obviously, the legislature could not, under the

foregoing provisions, impose an income tax upon corpor-

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

it were a tax on property. Our constitution then pn

hibited any tax on property unless structured to be mi

form as to valuation.

After reaching the conclusion that an income tax wa

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

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

article [X-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

=~ FF a | DD Pt

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A23

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 vy. Southern Pacific R. Co., C.C.,

13 F. 722, appeal dismisdéd 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 St.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

constitutional provision requiring uniformity of taxation

was involved. Even though the California consttution

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,

“nersons’’ as used 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 bar, by virtue of the adoption of article

IX-A, there is no constitutional requirement that taxes

A%

on personal property be uniform as to individuals anj

corporations so that each pays a tax in proportion to th

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 js

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 jg

whether, absent the requirement of a State constitution

that corporate and individual personal properties be

taxed the same, the equal protection clause of the four.

teenth amendment permits them to be taxed differently,

I believe that it does! |

Without the constitutional requirement of urifformity

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 thereof 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-

A2%5

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

purden of paying ad valorem personal property taxes

pecause of the abolition of such taxes subsequent to Jan-

uary 2, 1971.” (Emphasis our.) 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 [X-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]-

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-

A26 |

tions engaged exclusively in intrastate commeres,

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 peculi

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 buai-

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 Ill. 2d 36, 250 N.E. 2d 633. We recognized

what we called the obvious advantages of carrying ona

business in the corporate form. The privilege of carrying

on a business in this form has many advantages: the

corporate ownership of property, freedom from personal

liability for corpoate 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

A27

differences between the privilege of owning property as

"4 corporate entity and the privilege of owning it as an

individual to justfy the exemption in the case of the

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 con-

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 IX-A constitutional amend-

ment creates a classification based upon the distinctions

inherent between corporations and individuals—a distine-

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,

vhich 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-

A28

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

article IX-A amendment was overwhelmingly ratified

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.

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 accon-

plished by the article IX-A amendment. (Wolfson y.

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-

A29

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.

A30

STATE OF ILLINOIS } gg

COUNTY OF COOK {

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-

GE E. KEANE and HARRY &.

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

; NO. 70 CH 51%

State of Illinois. :

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

A31

its attorneys, ORLIKOFF, PRINS, FLAMM & SUSMAN,

and upon the Cross-motion For Summary Judgment of

defendant ROBERT J. LENHAUSEN, Director, Depart-

ment of Local Government Affairs 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 pre-

mises

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.

9. 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 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

para:

ie

A32

people of Illinois at a referendum held on Novembe

7, 1970, and such amendment, by its terms, became gf.

fective January 1, 1971; that said Article [X-A purports

to prohibit the taxation of personal property by valu,

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

while leaving unaffected those provisions of the Ilinois

Constitution and the Revenue Act of Illinois (Ill. Rey,

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

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, specif.

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

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 Janv-

A33

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

standing that such assessment had not been completed

as of that date:

If 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 (Til. 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 part, the

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

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

tion of, personal property taxes imposed by the Revenue

Act of Illinois, the assessment of which were commenced

prior to January 1, 1971.

9, Except for those matters adjudicated by paragraphs

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

A34

manifest public importance of the issues and the sqb.

stantial amount of tax revenues that are involved.

DATED: , 1971.

ENTER: ~

7

Judge, Circuit Court of Cook

County, Illinois.

A35

ATE OF ILLINOIS }

SOUNTY OF cooK 5 *

IN THE CIRCUIT COURT OF COOK COUNTY,

ILLINOIS COUNTY DEPARTMENT,

TAX DIVISION

CLEMENS K. SHAPIRO, JER-)

QME HERMAN, d/b/a THE

SPOT, GUY S. ROSS AND EU-

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

ROSS & CO., a partnership; and

M. WEIL AND SONS, INC., an

Illinois Corporation, all individual-

ly and in representative capacity,

Plaintiffs,

Vs.

EDWARD J. BARRETT, County

Clerk of Cook County; BERNARD > No. 71 L 5745

J. KORZEN, County Treasurer

F 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. J

A36

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 a

tion was filed by plaintiffs for themselves and in a repr

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 Com.

ty and State defendants. Defendants have elected to stand

on their motions. 4

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 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, 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, whieh

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

A37

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

situated in the County of Cook and a taxpayer there-

In.

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 [XA, 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.

A38

All plaintiffs contend that if Article IXA does not pm.

hibit the taxation of all property, then Article [XA pn

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

erty taxed.

All plaintiffs contend that the prohibition of Artich

IXA, which abolishes the imposition of property ty

measured by valuation of the property taxes, extends tp

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 IXA 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 IXA, 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 ip

vokes prohibition of taxes by valuation on personal prop-

erty exclusively as to “natural persons” and _ personal

A39

property owned by them, but denies the same prohibition

to business entities and corporations, then such classifi-

eation 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

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

special legislation prohibited by Article IV, Section 22 of

Illinois 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 TI,

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-

“ als’ 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 TIXA 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 hecause the natural person owners of that busi-

ness entity are personally and individually liable for the

payment of that tax.

A40

Article [X-A prohibiting taxation by valuation of

erty owned by such business entities, while denying thy

prohibition as to corporations is proper, valid and ep,

stitutional under both Illinois’ Constitution and the (Cop.

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 corporat

owners of property, then such classification is discrimjp.

atory, unreasonable, and offensive to both the TIllinoiy

Constitution and the Constitution of the United State

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 [X-A. however:

Notwithstanding any other provision of this Constitp.

tion, the taxation of personal property by valuation js

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 thos

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

A41

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

tive of his class.

3 That this action is properly maintained as a class

action, and the members of those classes are adequately

and competenthy 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 Illinois Constitution

and the Constitution of the United States.

5. That Article IX-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 enjoyment of themselves

and their families.

A42

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

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 anj

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 respects contrary to and in variance

with the judgment of this Court; that Amending Article

IX-A of the Illinois Constitution is valid and constity.

tional in all respects and is immune to attack tinder 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 exch.

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.

A43

STATE OF ILLINOIS )

) 8s.

COUNTY OF COOK )

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 representative 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 Col

lector of Cook County, GEORGE E

KEANE and HARRY H. SEMROW

Members of the Board of Appeals of

Cook County, P. J. CULLERTON

County Assessor of Cook County,

EDWARD J. BARRETT, County

Clerk of Cook County, and ROBERT

J. LEHNHAUSEN, Director, De-

partment of Local Government Af-

fairs of the State of Dlinois,

L TO. 70 CH 5123

Defendants. |

A44

ORDER

This cause coming on to be heard upon the Motion fy

Summary Judgment of LAKE SHORE AUTO PART

CO., an Illinois corporation, plaintiff, by and t

its attorneys, ORLIKOFF, PRINS, FLAMM & SUSMAN,

and upon the Cross-motion For Summary Judgment of

defendant ROBERT J. LEHNHAUSEN, Director, D,

partment of Local Government Affairs of the State of

Illinois, by and through the Attorney General of Illinois,

and the Cross-motion For Summary Judgment of defend.

ants KORZEN, KEANE, SEMROW, CULLERTON ani

BARRETT, 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 premise

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 Com.

ty of Cook, which property has been included on the as-

sessment role now being prepared by the assessing off-

cials of Cook County Yor 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 defii-

tion of the plaintiff class.

A45

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 effec-

tive January 1, 1971; that said Article [X-A 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 Consti-

tution 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 corporations and

other “non-individuals”.

4, That said Ariticle 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, speci-

fically 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 Consti-

tution of the United States; that said Revenue Act of

Illinois, to the extent that it purports to impose person-

al property taxes with respect to the property owned by

plaintiff is therefore unconstitutional, void and of no ef-

fect whatsoever.

6. That Article IX-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,

A46

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

assessment of which had been commenced prior to Janp.

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

standing that such assessment had not been complete

as of that date.

IT IS THEREFORE ORDERED, ADJUDGED AyD

DECREED THAT:

7. The plaintiff’s Motion For Summary Judgment js

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

amended by Article IX-A of the Illinois Constitution, is

violative of the Fourteenth Amendment to the Consti.

tution of the United States and is held to be void and

unenforceable 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 part, the

Court declaring that Article IX-A of the Illinois Consti.

tution is not applicable to, and does not impair the col.

lection of, personal property taxes imposed by the Reve.

nue Act of Illinois, the assessment of which were com-

menced prior to January 1, 1971.

9, Except for those matters adjudicated by par.

graphs 7 and 8 of this Order, this Court retains jurisdic.

tion 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

SSS SS

Se Fakp .tae poe HE RE

A47

appeal as expeditiously as possible because of the mani-

fest public importance of the issues and the substantial

amount of tax revenues that are involved.

| DATED: , 1971.

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Judge, Circuit Court of Cook

County, Illinois.

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FILED

JAN 6 1977

3n the E. ROBERT SEAVER, C

Supreme Court of the United Statez

No. 71-674

LAKE SHORE AUTO PARTS CO., an Illinois Corporation, on its own

behalf a8 representative of a class of corporations and other

Appellant and Petitioner,

vs.

J. KORZEN, County Treasurer and ex-officio

of Cook County, GEORGE M. KEANE and HARRY

SOW, Members of the Bowd of Appeals of Gok Satin 5

IN, County Assessor of County, EDWARD J.

BARRETT, County Clerk of Cook County, and ROBERT J. LEHN-

HAUSEN, Director, Department of Local Government Affairs of the

Appellees and Respondents.

No. 71-685

ROBERT J. LEHNHAUSEN,

Petitioner,

vs.

LAKE SHORE AUTO PARTS, et al.

Respondent.

No. 71-691

EDWARD J. BARRETT, County Clerk of Cook County, Illinois, et al.,

Petitioners,

vs.

CLEMENS K. SHAPIRO, et al.,

Respondents.

CONSOLIDATED MOTION TO STRIKE AND BRIEF

IN OPPOSITION TO CASES 71-674, 71-685, 71-691 OF

RESPONDENTS, EUGENE L. MAYNARD, PROVISO

TOWNSHIP HIGH SCHOOL DISTRICT #209, BELL-

WOOD GRADE SCHOOL DISTRICT #88, CICERO

GRADE SCHOOL DISTRICT #99, and RIVER GROVE

GRADE SCHOOL DISTRICT #851, all in Cook County,

Illinois.

ANCEL, STONESIFER & GLINK WITWER, MORGAN & BURLAGE

CEL SAMUEL W. WITWER

LOUIS AN! A

STEWART H. DIAMOND 141 W. Jackson Boulevard

111 W. Washington Street Chicago, Illinois 60604

, Illinois 60602 Tel. (312) 427-8750

The Scheffer Press, Inc—ANdover 3-6850

Statement of the COE accssiconecons

Opinions Below . sista’ nnd

_

II.

BRIEF IN OPPOSITION TO PETITION FOR

A WRIT OF CERTIORARI BY ILLINOIS

ATTORNEY GENERAL ON BEHALF OF A

STATE OFFICER — DOCKET NO. 71-685.

* . e

THE FINDING OF THE ILLINOIS SU-

PREME COURT THAT CORPORATIONS

MAY NOT CONSTITUTIONALLY BE SIN-

GLED OUT FOR AD VALOREM PERSONAL

PROPERTY TAXATION IS NEITHER NOV-

EL NOR ERRONEOUS AND IS NOT, ALONG

WITH THE RULES OF CONSTRUCTION OF

ILLINOIS LAW WHICH EXPOSES THAT

INFIRMITY, A PROPER SUBJECT FOR A

GRANT OF REVIEW UNDER CERTIORARI

JURISDICTION. ...

BRIEF IN OPPOSITION TO PETITION FOR

A WRIT OF CERTIORARI BY STATE’S AT-

TORNEY OF COOK COUNTY ON BEHALF

OF COUNTY OFFICERS— DOCKET NO.

71-691.

* * *

THE ILLINOIS CONSTITUTION OF 1970,

EFFECTIVE JULY 1, 1971, MADE NO

CHANGE IN THE CRITERIA GOVERNING

DECISION OF THIS CASE. THE ILLINOIS

SUPREME COURT DID NOT IGNORE OR

OVERLOOK THE NEW ILLINOIS CONSTI-

TUTION BUT CORRECTLY CONCLUDED

THAT THE BASIC FEDERAL QUESTION,

INVOLVING VIOLATION OF THE EQUAL

PROTECTION CLAUSE, REMAINED UNAF-

FECTED BY THE NEW CONSTITUTION. .... 20

ii

PAGE

III. MOTION TO DISMISS AND BRIEF IN OPPo.

SITION TO PETITION OF LAKE SHORE

AUTO PARTS CO.— DOCKET NO. 71-674,

WHERE A LITIGANT CONCEDES THAT

ITS CLAIM OF UNCONSTITUTIONALITY

HAS BEEN CORRECTED BY THE DECL.

SION OF A STATE SUPREME COURT AND

BENEFIT HAS THEREBY BEEN BROUGHT

TO THE LITIGANTS CLASS, A FURTHER

APPEAL SHOULD NOT BE GRANTED ON

THE SOLE GROUND THAT A FINAN.

CIALLY MORE BOUNTIFUL RESULT Ig

SOUGHT. ossessssscsssssssrsssssssssnsssessseseesssttsssieecs., %

TABLE oF CasES

Aberdeen S. & L. Ass’n v. Chase, 289 P. 536 (Wash.

TN) esses capansenspceescoeteatvsstenseensesteatovealevapsesieessesecdessectetaciece 1!

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

Anderson v. Martin, 375 U.S. 399 ( 1964) oes 5

Avery v. State of Georgia, 345 U.S. 559 (1953) ........... 31

Bromley v. McCaughn, 280 U.S. 124 (1929) oooceeccccccme 13

Cramp v. Board of Public Instruction, 368 U.S. 278

CMON eats tecteats rsceepsaiesnees costes versssveassacceoedemnmreecesntesiene 18, 19

Dombrowski v. Pfister, 380 U.S. 479 (1965) -.ccceeccccccssose 3

Evans v. Selma Union High School Dist., 222 P. 801

RY css sa cesses remecretgpeecens se scescbisecsiaiaseaticns 31

First National Bank v. Ayers, 160 U.S. 660 ( 1896) ........ 19

Flint v. Stone Tracy Co., 220 U.S. 107 (1911) ...cccsssen 14,15

iti

PAGE

Freedman v. Maryland, 380 U.S. 51 (1965) «0... 35

Gamble-Robinson Fruit Co. v. Thoreson, 204 N.W. 861

(ND. 1925) ssessssssssssessesceeecessensnunsnsnansnannnnecnnecnensanansnsnseee 11

Garysburg Mfg. Co. v. Pender County, 42 F.2d 500

(ELD.N.C. 1930) ..sssssscssssssssnssnsssesesscseeceesenscnnnunnnansssseeeseee 13

Gomillion v. Lightfoot, 364 U.S. 339 (1960) ......-..--sssee 31

Griffin v. California, 380 U.S. 609 (1965) ......-.--rrssseeeceee 35

Grifin v. County School Board, 377 LL. Sh |. goemreenee 31

Harman v. Forssenius, 380 U.S. 528 (1965) .........-.-0+ 35

Henry v. Mississippt, 379 U.S. 443 (1965) .....-ssssesssseeseees 18

H. Roww Co. v. Texas Citrus Comm’n., 247 S.W. 2d 231

(Tex. 1952) ..escssssscsssccneeseneessneesnessnneessssssnessnssssneessnecsenesesse 13

Illinois Chiropractic Society v. Giello, 18 Ill.2d 306

(1960) .a.ssccooesessosssssssssosscenscessescennecsnscssnnecsvsesenesessessessssaneseescs 25

In re Petraeus, 86 P.2d 343 (1939) ......... caeunioeerasseucensies 31

Jackson v. Pasadena, 382 P.2d 878 (1963)... 31

Karlson v. Murphy, 387 Ill. 436 ..........sccssesesssesesseessesnenenees 33

Kedroff v. St. Nicholas Cathedral, 344 U.S. 94 (1952).. 18

Keyishian v. Board of Regents, 385 U.S. 589 (1967) ..... 35

Madden v. Kentucky, 309 U.S. 83 (1940) .........esscscsseeees 18

Mount Hope Cemetery Co. v. Pleasant, 32 P.2d 500

PRs LOGE) sseeesace ses et acters etterercersnrctarteerererenneereeens 13

Mulkey v. Reitmam, 50 Cal. Rep. 881 ..........sscsseseseeeeeeeeee 32

Near v. State of Minnesota, 283 U.S. 697 (1931) .......... 31

Northern Pacific Ry. Co. v. Sanders County, 214 P. 596

(Mont. 1923) .cccccccccscssssssssssecsssecsesecssscssssssvnsssssesssseeeesenees 11

lv

Northwestern liar Co. v. State, 220 baad ry

(N.D. 1928) NOE |

Palmer v. Thompson, ........ [tf - Seen , 91 1 BCE 1940

URE EY sestctaeesteeerinisesiesnaccseests ioesecteenonenneensoanenn ae |

Quaker City Cab Co. v. Pennsylvania, 277 U.S. 389...

soos sessseeesnsssssrsseerssneeeesesnersl ly 12, 13 17

Redfield v. Fisher, 292 P. 813 (Ore. 1980) ...eeccccccm.. ll

Reitman v. Mulkey, 387 U.S. 369 (1967) oo... 31,2

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

FA LR soretasristiycentasevtinsgeteicisiesvesicensseciiviinenmnes 9, 10,19

Santa Clara County v. Southern Pacific R. Co., 18 Fed,

BB5 (18GB) eesssscsccsssessessessessesessesstsserssssssssssssttsssicsesse, 9,10,1

Scripto, Inc. v. Carson, 362 U.S. 207 (1960) .. on JB

Select Base Materials v. Board of Education, § 395, "

Em EIDE iaicsicecteststttteereseeenenentioennstiiiincens: 31

Shapiro v. Thompson, 394 U.S. 618 (1969) oo... %

Shelton v. Tucker, 364 U.S. 479 (1960) .occceccecccecccssoseemes 4

Smith v. People, 361 U.S. 147 (1959) ..ceecccccseccsscsssmme 5

Snowden v. Hughes, 321 U.S. 1 (1944) coececcceccccsscsssme 2

State ex rel. Northern Pacific Ry. Co. v. Dumcan, 219

P. 638 (Mont. 1923) oo. cccsescscsceeeeees ll

State v. Hunt, 9 N.E. 2d 676 (Ohio 1937) ......ccccsessosvessen a}

Thorpe v. Mahin, 43 Tll.2d 36 (1969) .o...cccscccesscssseessssnen 14,15

Time, Inc. v. Hill, 385 U.S. 374 (1967) %

U.S. v. Jackson, 390 U.S. 570 (1968) ... %

Village of Glencoe v. Hurford, 317 Tl). 203 ceccccccccsmmmn %

v

Walker v. Birmingham, 388 U.S. 307 (1967) .......s00

Walker v. Northern Pacific Ry., 47 Fed. 681 (C.C.N.D.

891) ... . 11

Wheeling Steel Corp. v. Glander, 337 U.S. 562 (1949) ..9, 13

WHYY, Inc. v. Borough of Glassboro, 393 U.S. 117

(1968) ssseevsssossssescenssssensnsnessennnsescssnnsssrenanecernnnnesssssnnessecsnnenecs 14

Wiemann v. Updegraff, 344 U.S. 183 (1952) ........02+. 34

Seconpary Sources

Cooley on Taxation (4th ed.) 9

Excise, License and Other Taxes, 103 A.L.R. 18 ............ 13

McLaughlin, The Court, the Corporation and Mr.

Conkling, 46 Am. Hist. Rev. 45 (1940) .........s.ssscsssessees 9

Netsch, Chicago Bar Record (Nov. 1970) p. 114............ 24

Sholley, Corporate Taapayers and the Equal Protec-

tion Clause, 31 Ill. L. Rev. 463 (1937) 9

LULA ESE SURE Ste NR LOONIE he LER TAA

* !

In Tue .

SUPREME COURT OF THE UNITED STATES

— —~ —

— — — ——

No. 71-674

LAKE SHORE AUTO PARTS CO., an Illinois Corporation, on its own

behalf and also as representative of a class of corporations and other

“non-individuals”, .

Appellant and Petitioner,

ty Treasurer and

Collector of Cook County, GEORGE M. KEANE and

SEMROW, Members of the Board of A als of Cook County, P. J.

IN, County Assessor of k County, EDWARD J.

BARRETT, County Clerk of Cook County, and BERT J. LEHN-

HAUSEN, Director, Department of Local Government Affairs of the

State of Illinois,

Appellees and Respondents.

No. 71-685

ROBERT J. LEHNHAUSEN,

Petitioner,

vs.

LAKE SHORE AUTO PARTS, et al.

Respondent.

No. 71-691

EDWARD J. BARRETT, County Clerk of Cook County, Illinois, et al.,

Petitioners,

vs.

CLEMENS K. SHAPIRO, et al., 4

Respondents.

CONSOLIDATED MOTION TO STRIKE AND BRIEF

IN OPPOSITION TO CASES 71-674, 71-685, 71-691 OF

RESPONDENTS, EUGENE L. MAYNARD, PROVISO

TOWNSHIP HIGH SCHOOL DISTRICT #209, BELL-

WOOD GRADE SCHOOL DISTRICT #88, CICERO

GRADE SCHOOL DISTRICT #99, and RIVER GROVE

GRADE SCHOOL DISTRICT #851, all in Cook County,

Ilinois.

_e

ae

STATEMENT OF THE CASE

This brief, being a motion to strike and a brief ip op.

position to petitions for writs of certiorari, is file by

Kugene L. Maynard, a citizen and taxpayer of Cook

County, Illinois, and four public school districts in Cook

County, Illinois, Proviso Township High School District

No. 209, Bellwood Grade School District No. 88 Cicer

Grade School District No. 99, and River Grove Grade

School District No. 85-14. These respondents, hereinafter

referred to as the “Maynard respondents” were plaintiff;

in a declaratory judgment action filed by leave of the

Illinois Supreme Court as a matter of original jurisdiction,

That case was consolidated along with two other case

raising the same or similar issues. The three cases wer

argued together, and the Illinois Supreme Court issned ,

single opinion. The caption of those consolidated cases iz

the Illinois Supreme Court was as follows:

No. 44199

LAKE SHORE AUTO PARTS CO., an Illinois Corporation, on its ow

behalf and also as representative of a class of corporations

“non-individuals”, which class is herein described,

Members of the Board of of Cook County, P. J. CULLERTON,

Assessor of Cook ty, EDWARD County

Clerk of Cook County, and ROBERT J Director,

Department of eS

Appeal from the Circuit Court of Cook County, Llinois,

County Department, Chancery Division.

ae a ae ee oe oe ee

e-_ = —-.h[h6h—= ae aa

a Se See

———

SUGENE L. MAYNARD, PROVISO TOWNSHIP HIGH SCHOOL

MISTRICT #209, BELLWOOD GRADE SCHOOL DISTRICT #88,

PICERO GRADE SCHOOL DISTRICT #99, and RIVER GROVE

GRADE SCHOOL DISTRICT #85-1/2, all in Cook County, Illinois,

—_———

——_—

ARD J, BARRETT, County Clerk of Cook County; BERNARD J.

MEORLEN, County Treasurer and ex-officio Coun Collector of Cock

|

Original Proceeding Relating To Revenue.

—_

No. 44432

CLEMENS K. SHAPIRO; JEROME HERMAN, d/b/a THE SPOT; GUY

$. ROSS AD SE D. ge gt ad S. ROSS & CO., a

partnership; . WEIL AND +» an Illinois Corporation,

all individually and in a representative capacity,

EDWARD J. BARRETT, County Clerk of Cook County; BERNARD J.

KORZEN, County Treasurer —. ex-officio Coun lector of Cook

the Board ls of Cook County; P. J. CULLERTON, County

Assessor of County, and ROBERT J. LEHNHAUSEN, Director,

Department of Local Government Affairs of the State of Illinois,

———_

——___—

Appeal from the Circuit Court of Cook County, Tax Division.

Honorable THOMAS C. DONOVAN, Judge Presiding.

Plaintiffs- Appellants,

The Lake Shore Auto Parts case is before this Court as

Docket No. 71-674 on a request for an appeal and a peti-

tion for a writ of certiorari. The Attorney General of the

State of Illinois, the adverse party to Lake Shore in the

lower proceedings, also seeks a writ of certiorari (Docket

No, 71-685). The State’s Attorney of Cook County has

sought a writ of certiorari in the Shapiro case (Docket No.

71-691). The Maynard respondents were the only parties to

the previous litigation who urged the unconstitutionality

SPL TET ET LT AI BEES NE os