Amicus Curiae Brief — Lehnhausen v. Lake Shore Auto Parts Co.

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Dreme Court, U.S.

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JUL 17 1972 OCT 10 1972

ot~ Zn the

Supreme Court of the United States

Ocroszer Term A. D. 1971

ICHAEL RODAK, JR., CLERK

—

No. 71-685

ROBERT J. LEHNHAUSEN,

—

—_—_—_—_

Petitioner,

vs.

LAKE SHORE AUTO PARTS, et al.

Respondents.

No. 71-691

EDWARD J. BARRETT,

County Clerk of Cook County, Illinois, et al.,

Petitioners,

vs.

CLEMENS K. SHAPIRO, et al.,

Respondents.

On Writ Of Certiorari To The

Supreme Court Of Illinois

MOTION FOR LEAVE TO FILE A BRIEF AND

ORALLY ARGUE AS AMICI CURIAE &

BRIEF OF AMICI CURIAE

ANCEL, GLINK, DIAMOND WITWER, MORAN & BURLAGE

& MURPHY SAMUEL W. WITWER

LOUIS ANCEL 141 W. Jackson Boulevard

STEWART H. DIAMOND Chicago, Illinois 60604

111 W. Washington Street 427-8750

Illinois 60602

782-7606

Attorn for Amici Curiae

Proviso Township School District #209, et al.

The Scheffer Press, Inc—(312) 263-6850

In Tue

SUPREME COURT OF THE UNITED STATES

Ocroser Trem A. D. 1971

No. 71-685

ROBERT J. LEHNHAUSEN,

Petitioner,

vs.

LAKE SHORE AUTO PARTS, et al.

Respondents.

No. 71-691

EDWARD J. BARRETT,

County Clerk of Cook County, Illinois, et al.,

Petitioners,

vs.

CLEMENS K. SHAPIRO, et al.,

Respondents.

———————————o

On Writ Of Oertiorari To The

Supreme Court Of Illinois

See

MOTION FOR LEAVE TO FILE A BRIEF

AND ORALLY ARGUE AS AMIOI CURIAE

Proviso Township High School District # 209, Cicero

Grade School District #4 99, Bellwood Grade School Dis-

trict # 88, and River Grove Grade School District #8514,

by their attorneys, Ancel, Glink, Diamond & Murphy

and Witwer, Moran & Burlage, move for leave to file a

initia

Brief and Orally Argue as Amici Curiae in the above.

entitled cases, the consent of the attorneys for the peti.

tioners and respondents not having been obtained, and in

support thereof state as follows:

1. In a substantial sense, these applicants were the

prevailing parties in the proceedings in the Illinois Su.

preme Court (there deseribed, in Docket No. 44308, as

the Maynard petitioners). Eugene L. Maynard is not an

applicant for amicus standing since the class of individual

taxpayers is represented by other parties to this litiga.

tion.

2. These applicants are all school districts within Cook

County, Illinois, which receive substantial revenue from the

proceeds of the Illinois personal property tax.

3. These parties first became interested in the cases

at bar when on March 30, 1970, the respondent Lake Shore

Auto Parts Co., procured a judgment from Judge Walter

P. Dahl of the Circuit Court of Cook County which had

the effect of abolishing all Illinois personal property taxes,

That decision found that the newly adopted Article IX-A

of the Illinois Constitution which abolished personal

property tax for “individuals” had amended a provision

of the Illinois revenue statutes. The trial court held that

the revenue statute once amended was unconstitutional

since it imposed a property tax on corporations and ex-

cluded individuals. The trial court thus held Article IX-A

to be constitutional, the Revenue Act provision uncon-

stitutional, and all personal property taxation to be

ended.

Had that trial court decision been upheld, it would have

resulted in an immediate loss in yearly tax revenue of

$1,752,231.00 for applicant Proviso, $1,203,169.00 for ap

a ya

plicant Cicero, and lesser but substantial amounts by

Bellwood and River Grove, all as part of a statewide loss

in yearly revenue for school districts, municipalities,

counties, and other public bodies of over $250,000,000.00.

4. These applicants were unable to negotiate employ-

ment contracts, make purchases of needed supplies, con-

struct buildings or prepare budgets and financial projec-

tions in the uncertain situation caused by the trial court

decision in Lake Shore. In addition, the applicants believed

that the judgment order entered by Judge Dahl was

erroneous. Therefore, these applicants along with an

individual taxpayer, Eugene L. Maynard, requested leave

to file an original action in the Illinois Supreme Court.

The petition in the Illinois Supreme Court alleged, among

other things, that the parties in the Lake Shore case would

not present all necessary arguments to the Court. While

lake Shore Auto Parts argued that a portion of the

Revenue Act (Ill. Rev. Stat. 1969, Ch. 120, Secs. 482, et

seq.) was unconstitutional, these applicants sought to enter

the case to argue the unconstitutionality of Article IX-A

itself. The Illinois Supreme Court\{which already had the

Lake Shore case before it on appeal) allowed these ap-

plicants leave to file their action under the Court’s powers

to grant original jurisdiction. That ‘original action and

the Lake Shore case were consolidated. _

5. After these applicants were granted leave to file

their original action in the Illinois Supreme Court, a case

was hurriedly brought, in the same Circuit Court of Cook

County (but before another judge thereof), by a group of

parties, all but one of whom had previously been refused

the right to file such an original action. Those parties

were Clemens K. Shapiro, a natural person; Jerome

Herman, doing business as “The Spot”, representing in-

oun 4 dino

dividuals engaged in business; Guy S. Ross and Eugene.

D. Ross, doing business as “Guy S. Ross & Co.”, represent.

ing individuals engaged in business as partners; and W.

Weil & Sons, Inc., representing corporations. After a

highly expedited trial and appeal, their case was consolj.

dated with the other two cases, and all three cases were

argued together with a single opinion being written.

6. Among all of the parties before the Illinois Supreme

Court, these applicants were the only parties to seriously

argue that Article IX-A was unconstitutional on equal

protection grounds. Such was the exact judgment reached

by the Illinois Supreme Court. After having made the

declaration of unconstitutionality of Article IX-A, in

accordance with the prayer of the Maynard petitioners,

the court proceeded to not only dismiss the Maynard

original petition but also mandated dismissal of the Lake

Shore and Shapiro cases by the lower courts. From that |

judgment these applicants, having prevailed, did not /

appeal. Since the state and county officials who were

defendants in the Illinois Supreme Court chose the Lake

Shore and Shapiro cases—rather than the Maynard case—

as their vehicles for seeking certiorari jurisdiction, ques-

tions arose whether applicants were clearly entitled to the

status of “respondents” in this Court. Anxious to protect

our victory and desirous of clarifying the point, we, on May

5, 1972, filed a motion requesting recognition as parties to

the certiorari proceeding. This Court denied that motion

without prejudice to our rights to request amici standing.

7. An analysis of the position of the parties now be-

fore this Court and an examination of the briefs already

filed will quickly show that these applicants, as amici

curiae, will be the only parties effectively urging af.-

firmance of the Illinois Supreme Court decision.

—5—.

(a) The Illinois Attorney General and the State’s

Attorney of Cook County, representing state and

county tax Officials, are both in this case since it is

their responsibility to attempt to uphold the validity

of Article IX-A. Generally, such officials would be

representing the applicant public bodies who are in

danger of losing established tax revenues. In this

case, however, the argument of such public bodies

will only be before the Court by way of this amici

brief, which will show the illegal and adverse practical

effects of reversing the Illinois Supreme Court deci-

sion.

(b) Lake Shore Auto Parts Co. is the respondent

in case No. 71-685. Lake Shore is a small auto parts

company which sought in this case to represent all

corporations. In the trial court, Lake Shore succeeded,

by an unusual argument, in procuring an order which |

would have abolished all personal property taxes on

corporations and: everyone else as well. The Illinois

Supreme Court rejected that argument and overruled

Lake Shore’s trial court victory. Lake Shore at-

tempted to review that decision in this Court but its

petition for writ of certiorari was denied. At that

point, the interest of Lake Shore waned. Lake Shore,

by its attorney, then asked to withdraw from this

litigation. Such request was denied. We are informed

that Lake Shore will file a brief in this case. Such

brief, in spite of the denial of certiorari, will argue

points rejected by both the Illinois Supreme Court

in its opinion and this Court in its denial of certiorari

to Lake Shore. Lake Shore, though nominally a re-

spondent, will ask that the Illinois Supreme Court

be reversed. It is therefore obvious that said re-

spondent may not be viewed as an advocate for the

affirmance of the Illinois Supreme Court decision.

(ce) Clemens K. Shapiro, Jerome Herman, Guy S.

Ross and Eugene D. Ross are among the respondents

in Case No. 71-691. The briefs of these parties have

—§—

already been submitted to the Court. While each of

these parties is designated a “respondent” and might

be expected to support the position taken by the

Illinois Supreme Court, their briefs take an opposite

position. Each of these respondents requests that the

judgment of the Illinois Supreme Court be reversed,

The interest of these parties is that of natural persons

who own personal property either for their own enjoy.

ment or for business usage. Such parties can only

oppose the position taken by the Illinois Supreme

Court. It is obvious both from their position and their

briefs that the Court will receive from them no argn.

ment adverse to that of the Attorney General or

State’s Attorney.

(d) The only other “party” in the case is M. Weil

& Sons, Inc. The brief of M. Weil & Sons, Inc. con-

tains a statement that they will adequately and

competently represent “every corporation in the State

of Illinois” (Respondent’s Brief—page 2). An ex-

amination of the Weil brief, however, indicates other.

wise. The first argument heading put forward by the

corporation is to “adopt and respectfully submit” the

opinion of the Supreme Court of Illinois. No discus.

sion of that opinion is given. The second argument

heading is a discussion comprising three pages with-

out pertinent citation of the central issue in this litiga-

tion. The third argument heading in the brief (set

out over 3144 pages) is that Article IX-A of the

1870 Constitution is too vague to stand as a provision

of basic Illinois law. With all due respect to M. Weil

& Sons, Inc., the contents of its brief hardly repre-

sents an adequate defense of itself let alone the

opinion of the Illinois Supreme Court.

(e) In view of the foregoing, we believe that it is

fair to characterize the Shapiro case as a “friendly”

suit with all parties thereto being “friendly” partici-

pants not true adversaries.

iil as

8 The only parties with any interest in the affirmance

of the Illinois Supreme Court decision are these applicants

who seek amici status and who were substantially the

prevailing parties therein. That these applicants have no

quarrel with a properly drafted statutory or constitution-

al exemption of personal property taxation is shown in

our brief which discusses a very recent Illinois legislative

development to that effect. On behalf of the citizens of

our districts, however, we believe: that we do have a

responsibility to resist the unconstitutional removal of a

large portion of the tax base of public bodies within the

State of Illinois by what we and the Illinois Supreme

Court view to be unconstitutional means.

9. If these applicants are granted amici status, they

will argue in their brief and in their oral presentation

that the issues which this case raises involve all public

bodies throughout the United States and the continued

validity of equal protection guarantees for all corpora-

tions throughout the country. These issues are of enormous

importance and ought not to be presented before this

Court in anything less than a full adversary presentation.

10. For the reasons set out in this motion, regarding

the non-adversdty status of the parties now before the

Court and the lack of any party to argue for the affirmance

of the Illinois Supreme Court decision, these applicants

ask that in addition to the privilege of filing a brief that

they be allowed to orally argue. We respectfully urge

that the presence during oral argument of counsel for

these amici among whom are the President of the 1970

Illinois Constitutional Convention and lawyers who are

knowledgeable in Illinois municipal and school law, wil]

be in aid of the Court.

Respectfully submitted,

AnceL, Guinxk D1amMonp Witwer, Moran & Burtacz

& Murpuy SamueL W. Witwer

Lovis ANCEL 141 W. Jackson Boulevard

Stewart H. Diamonp Chicago, Illinois 60604

111 W. Washington St. 427-8750

Chicago, Illinois 60602

782-7606

Attorneys for Applicants.

II senses caeeweshnies sendin isseinscccdkiblesaasionncnsesihatesiiateiaiaie

Opinion Below ...... isis sibemileeegciese sini cael itinieatatais died

FORTE vcictesesessorinsnensone

Constitutional Provision

Question Presented ................

Statement of the Case ...........cccccccccsccescosses

IS: OE OIE oosiiscnsnsessccnavinscstnsnscnniosanoipiien

Argument:

I. DISCRIMINATION BETWEEN CORPORA-

TIONS AND NATURAL PERSONS IN AD

VALOREM PERSONAL PROPERTY TAXA- |

TION BASED SOLELY ON. OWNERSHIP

IDENTIFICATION, CONS TES A PAT-

ENT VIOLATION OF THE EQUAL PRO-

TECTION CLAUSE OF THE FOURTEENTH

DME TORIES © foc dissscrssscienteicticiniagesiicsans

Il. NO VALID PUBLIC POLICY SUPPORT-

ING THE PROPOSED DISCRIMINATION

AGAINST CORPORATIONS CAN BE FOUND

IN THE LEGISLATIVE HISTORY OF AR-

TICLE IX-A READ ALONE OR IN CON-

JUNCTION WITH THE NEW CONSTITU-

TION OF 1970 OR THE DELIBERATIONS

OF THE CONSTITUTIONAL CONVENTION

WHICH DRAFTED IT .................

Ill. THE REVERSAL OF THE ILLINOIS SU-

PREME COURT’S OPINION WOULD END

EQUAL PROTECTION OF THE LAWS. FOR

CORPORATE PERSONS, AND WOULD

HAVE VASTLY DESTRUCTIVE LEGAL,

SOCIAL AND ECONOMIC CONSEQUENCES

_—

IV. THE ILLINOIS SUPREME COURT DID NOT

IGNORE OR OVERLOOK THE NEW ILLI.-

NOIS CONSTITUTION, AS ARGUED BY

THE COUNTY OFFICERS, BUT CORRECT.

LY CONCLUDED THAT THE BASIC FED-

ERAL QUESTION, INVOLVING VIOLATION

OF THE EQUAL PROTECTION CLAUSE,

REMAINED UNAFFECTED BY THE ADOP.

TION OF THAT DOCUMENT . 4

V. THE INTERPRETATION OF ARTICLE XA

ADOPTED BY THE TRIAL COURT IN THE

LAKE SHORE CASE IS INCONSISTENT

WITH THE RULES OF STATUTORY INTER-

PRETATION, WOULD PERMANENTLY

ABOLISH ALL PERSONAL PROPERTY

TAXES AND CAUSE FINANCIAL CHAOS

FOR SCHOOLS, MUNICIPALITIES AND

ALL OTHER PUBLIC BODIES IN ILLINOIS 4

Chonda 5 es 59

TaBLE oF CASES

Allted Stores of Ohio, Inc. v. Bomers, 358 U.S. 522

CORD sectislcdidiecitincschiehadensciasiahadeaicisvincnedibininlsnenate 11, 8

Bolling v. Sharpe, 347 U.S. 497 (1954) ......cccccsssscesecsessees 34

Bromley v. McCaughm, 280 U.S. 124 (1929) .......cccsssse 16

Concordia Fire Ins. Co. v. Illimois, 292 U.S. 535

CUI Wadia chip chs ceccesciisccapntnccscanosioansionsseciingisadylpes 11, 19

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

ED idacecispnins ptilisiepsseiiticlonctimstsctein 8

Cumberland Coal Co. v. Board of Revision, 284 US. —

23 (1931) 20

Fairfield v. County of Gallatin, 100 U.S. 47 (1879) .. oe

First National Bank of Garnett v. Ayers, 160 US.

SOU IND ‘css scndcpisicipiinneninbatbnesdcinegpesdveiontesis eis Sale ot 8

ili

PAGE

Flint v. Stone Tracy Co., 220 U.S. 107 (1910) ............ 14, 22

Ft. Smith Lumber Co. v. _ 251 U.S. 532

(1920) 22

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

(E.D.N.C., 1930), reviewed other grounds, 50 F.2d

732 (4th Cir., 1931) 19

Gulf, C. d 8. F. Ry. Co. v. Ellis, 165 U.S. 150 (1897)....

Hanover Fire Insurance Co. v. Harding, 272 U.S. 494

(IGE) crccresscsssisasccorsagecee

Hebert v. Louisiana, 272 ME AIOE seiiecinicsoatingss 8

Highland Farms Dairy, Inc. v. — 300 U.S. 608

PIIEE Fs caciliinssnbiliabelisssscsesitbincrtececase sas 8

Home Insurance Company v. New York State, 134

US. 594 (1890) 14

Iowa-Des Moines Bank v. Bennett, 284 U.S. 239

REESE SGAs E ea a 20

Karlson v. Murphy, 387 Ill. 436, 56 N.E. 2d 839 (1944) 49

Kedroff v. St. Nicholas Cathedral, 344 U.S. 94 (1952) 8

Lake Shore Auto Parts Co. v. Korzen, 49 Tl). 2d 137,

Be Wet BO GOS CIGTL) ccccccciccsmssccsome 5, 8, 10

[ouisville, C. & C. R. Co. v. Letson, 43 U.S. 497

RET SSIES OPERAS VOI Se SNe oe NO AO UENCE NEE 35

Louisville Gas and Electric Co. v. Coleman, 277 US.

Be OWT E wochutiiiceracessichacpissinciesapudadnaeblass ns ..20, 35

[was v. 44th General Assembly, 377 U.S. 713 (1964) 28

McHenry v. Alford, 168 U.S. 651 (1898) ...ccccsccssssssee 15

Mt. Hope Cemetery Co. v. Pleasant, 139 Kan. 417,

32 P. 2d 500 (1934) ............. ~« 2

Mulkey v. Reitman, 64 Cal. 2d 529, 413 P. 2d 825

ROI ii cles seasachcica cn iealeniaicccechehesccasaon 48

PAGE

New York Rapid Tramsit Corp. v. City of New York,

303 U.S. 573 (1938) 21

Pembina Consolidated Mining and Milling Co. v. iene

sylvania, 125 U.S. 181 (1888) ul

Polk’s Estate v. Wendall, 13 U.S. 87 (1815) .............. .

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

(1928) 12, 15

Reitman v. Mulkey, 387 U.S. 369 (1967) ecccccccocscssoee 47

Royster Guano Co. v. Virginia, 253 U.S. 412 (1920)..11, 20

San Mateo Cty. v. Southern Pac. R. Co., 13 F. 722

(1882), app. dismissed per stip., 116 U.S. 138 (1885) 14

Santa Clara Cty. v. Southern Pac. R. Co., 18 F. 385

(1883), aff'd on other —— 118 US. 394

(1886) RC aie nro = 14, 35

Thorpe v. Mahw, 43 Ill. 2d 36, 250 N.E. 2d 633 (1969) 2

Village of Glencoe v. Hurford, 317 Ul. 203, 148 N.E.

a ND vacnsandeiencniebtisn ta iiteiitincatadinainaciecassenneccs 49

White River Lumber Co. v. Arkansas; 279 U.S. 692

FRR SEEN Rumen. | OA IN RNIE E 14, 23

Winters v. New York, 333 U.S. 507 (1948) oo... 8

ConstTITUTIONAL Provisions

Illinois Constitution of 1970,

pS AST aR ee Ne 28, 29, 30

Illinois Constitution of 1870

SE Fa OP i hittmeniibdi Siscsiiccenanitinicbtencieiaireanscntcacl 4

Illinois Constitution of 1870,

SUED TRUE. eitichieinitctenaiins cht 4

Statutes

Illinois Revenue Act of 1939,

1 et seq., Dl. Rev.

Stat. Ch. 120, 482 et seq. (1971) ..

PAGE

Orner Sources

1 Cooley on Taxation (4th Ed.),

1 280°.....

16 Corpus Juris Secundum,

Constitutional Law, §520

Debates, Sixth Illinois Constitutional

Convention, June 25, 1970, Tr. Vol. 74, p. 11

Illinois General Assembly,

House Bill 4218 (passed June 13, 1972) ............

Kamin, “Constitutional Abolution of Ad Valorem

. Personal Property Taxes,” 60 Illinois Bar

Journal 432 (1972) ..

Netsch, “Revenue,”

52 Chicago Bar Record 103 (1970) ..............0.

In Tue

SUPREME COURT OF THE UNITED STATES

Ocrosper Term A. D. 1971

ee ee ee

No. 71-685

ROBERT J. LEHNHAUSEN,

Petitioner,

vs.

LAKE SHORE AUTO PARTS, et al.,

Respondents.

No. 71-691

EDWARD J. BARRETT,

County Clerk of Cook County, Illinois, et al.,

Petitioners,

vs.

CLEMENS K. SHAPIRO, et al.,

Respondents.

————

On Writ Of Certiorari To The

Supreme Court Of Illinois

INTRODUCTION

Proviso Township High School District # 209, Cicero

Grade School District # 99, Bellwood Grade School Dis-

trict # 88, and River Grove Grade School District #

854% are all public bodies within the State of Illinois as-

signed the task of the education of the school children

within their districts. These parties have been involved

in the issues at bar since May 12, 1971, when the Illinois

Supreme Court granted their motion for leave to file a

Pon, ot

complaint in that court as an original action arguing

among other things, the constitutional invalidity of Article

IX-A of the Illinois Constitution. It has been the position

of these parties since that time that Article IX-A, added

by amendment to the Illinois Constitution of 1870 (at the

General Election of November 3, 1970), violated the equal

protection clause of the 14th Amendment of the United

States Constitution in that it attempted to require the

paying of personal property taxes by corporations while

freeing all other taxpayers from that burden.

These amici appeared in the Illinois Supreme Court in

a representative capacity on behalf of all public bodies

within the State which receive the proceeds of the Illinois

personal property tax. Each of the school districts ap.

pearing here as amici receive substantial revenues from

personal property taxes—amounting in the case of two

amici to over one million dollars per year. In the Illinois

Supreme Court these amici argued in the alternative. We

first argued that if the exemption of personal property

taxes “as to individuals” could be interpreted to exempt

only the non-business property of natural persons, then

such a classification would be valid under the 14th Amend-

ment. Such a distinction would not be based upon the

ownership of the property but upon its use. The [Illinois

Supreme Court rejected that argument stating that the

clear meaning of the language of Article IX-A was to

exempt from the tax all persons but corporate persons.

Our alternative argument in the Illinois Supreme Court

was that if such an interpretation was compelled, then

the Court had no choice but to find Article [X-A an wm

constitutional discrimination against corporations on equal

protection grounds. As has been pointed out in our mo-

tion for leave to file this brief, these amici were the only

parties to aggressively make that contention in the Ili-

nois Supreme Court. The Court accepted that argument.

In our motion for leave to file this brief (under this same

cover), We explain the rather nnusual circumstances

which have resulted in our appearing in this cause as

amici rather than as respondents. These parties, in their

representative capacity, on behalf of all public bodies in

the State, felt compelled to bring this original action and

to follow the litigation on behalf of their class in order

to resist the withdrawal of all personal property tax

revenue, as was the trial court finding in Lake Shore, or

substantial portions of personal property tax revenue, as

was the trial court finding in Shapiro. These amici and

the class they represent are not opposed to tax reform

but are opposed to such reform when brought about by

constitutional amendments which violate the equal protec-

tion clause and trial court decisions which erroneously

interpret long-standing case law. Having been granted the

status of amici by this Court, we shall, therefore, proceed

to argue that the decision, procured through our labors,

in the Illinois Supreme Court should be affirmed.

OPINION BELOW

The opinion and dissent thereto of the Supreme Court

of the State of Illinois are reported in 49 Ill. 2d 137 and

273 N.E. 2d 592.

of JURISDICTION

The jurisdiction of this Court is invoked to review a

final judgment of the Supreme Court of Illinois pursuant

to Title 28 U.S.C. § 1257 (3). The decision of the court

below was rendered on July 9, 1971. A petition for re-

hearing was denied on August 24, 1971. The petitions

for writ of certiorari were granted April 3, 1972.

oe Weer

CONSTITUTIONAL PROVISION

Article IX-A of the Constitution of the State of Illinois

of 1870, as amended, and approved, provides:

“Section 1. Notwithstanding any other provision of

this Constitution, the taxation of personal property

by valuation is prohibited as to individuals.”

QUESTION PRESENTED

Whether a State Constitutional provision which distis.

guishes between corporations and natural persons for

purposes of imposing an ad valorem tax on personal prop.

erty, a distinction based solely on ownership by ome as ¢

corporate person and the other as a natural person, vie.

lates the equal protection clause of the Fourteenth Amend.

ment.

STATEMENT OF THE CASE

The Illinois Constitution of 1870, Article IX, $1, re

quired the Illinois General Assembly to levy ad valorem

taxes so that “every person and corporation shall pay

a tax in proportion to the.value of his, her or its property.”

(Emphasis added.) This mandate had been implemented

by a comprehensive Revenue Act which applied to all prop-

erty and to all taxpayers, with typical statutory exemp-

tions, e.g. charitable, religious. Revenue Act of 1939, §1

et seq., Ill. Rev.-Stat. ch. 120, §482 et seq.

The Illinois General Assembly, by Senate Joint Resolu-

tion 30, adopted June 30, 1969, submitted a proposition

for referendum vote at the November, 1970 general elec-

tion, to adopt Article IX-A of the 1870 Constitution. If

adopted, Article IX-A purported to abolish the ad valorem

personal property tax, but only on property owned by

individuals, It received an overwhelming majority vote,

a ee

Various parties, including amici curiae, utilizing differ-

ent Illinois courts and presenting a variety of arguments,

presented the Fourteenth Amendment question, stated

supra, in the Illinois Supreme Court. That Court declared

Article IX-A as construed by it to be unconstitutional

under the equal protection clause of the Fourteenth Amend-

ment. Lake Shore Auto Parts Co. v. Korzen, 49 Ill. 2d 137,

273 N.E. 2d 592 (1971).

Several parties thereafter petitioned herein for writ of

certiorari seeking review of that decision. This Court

@ April 3, 1972, granted two of those petitions and con-

solidated the cases. Lehnhausen v. Lake Shore Auto Parts

_ Ue, No. 71-685; Barrett v. Shapiro, No. 71-691.

SUMMARY OF ARGUMENT

1. The issue is very narrowly limited both by conces- :

sion of the parties and by the decision of the Illinois

Supreme Court. That decision is viewed by this Court

as binding here in determining the construction of Article

IX-A of the 1870 Illinois Constitution, being an authori-

tative determination by the highest court of the State

of Illinois.

2. That authoritative construction discloses that: (a)

Article [X-A classifies personal property for ad valorem

taxation without regard to the characteristics or use of

the property, but solely on ownership; (b) the proposed

classification promotes no policy other than a desire to

free one set of property owners, i.e. natural persons,

from the burden of a tax imposed upon another set, 1.€.,

corporations; and (c) under Illinois law, ownership for

purposes of ad valorem property taxation is a neutral

consideration.

ae See

3. Accordingly, such an arbitrary classification as Arti.

cle IX-A purported to establish violated the equal pro.

tection clause of the Fourteenth Amendment, as inter.

preted for almost a century in a long line of federal and

state court decisions. Petitioners’ efforts to distinguish

these cases totally fail, since the cases they rely on ag

‘superseding’ or ‘undermining’ this long-established doe.

trine did not involve ad valorem property taxes in situa.

tions where the only grownd of discriminatory classifica.

tions against corporations was ownership per se.

4. Since the Illinois personal property tax, as affected

by Article IX-A, cannot conceivably be viewed as an ex.

cise, income, occupation or franchise tax, or as a special

property classification based on use, there can be no re.

versal of the Illinois Supreme Court, absent a showing

of a valid public policy justifying or advanced by this

discrimination against corporations. Petitioners wholly

fail to present any valid policy.

5. The legislative history of Article IX-A and of the

1970 Illinois Constitution, including the deliberations of

the Sixth Illinois Constitutional Convention, neither af.

ford any public policy justification for the discrimination,

nor cure the unconstitutional defect implicit in Article

IX-A.

6. Adoption of the arguments of plaintiff below in the

Lake Shore Auto Parts Co. case would violate basic prin-

ciples of constitut.onal interpretation and would cause

financial chaos for many public bodies.

7. Failure to sustain the decision of the Illinois Sv-

preme Court would constitute a rejection of a time-honored

interpretation of the equal protection clause. It in effect

would end equal protection of the laws as to corporate

persons. The consequences of such a decision would have

incalculable, adverse legal, social and economic impact.

DISCRIMINATION BETWEEN CORPORATIONS AND

NATURAL PERSONS IN AD VALOREM PERSONAL

PROPERTY TAXATION, BASED SOLELY ON OWNER-

SHIP IDENTIFICATION, CONSTITUTES A PATENT

VIOLATION OF THE EQUAL PROTECTION CLAUSE

OF THE FOURTEENTH AMENDMENT.

In parts I and II of our amici brief we deal principally

with the arguments and contentions of the Illinois Attor-

ney General contained in his Brief of Petitioner on Writ

of Certiorari granted in Docket No. 71-685. References in

these sections are to that brief and accompanying appen-

dix.

Unlike the several issues stressed in his petition for a

writ of certiorari, the Illinois Attorney General now prop-

erly narrows the issue of this case. He states in his brief

(p. 2) that the Question Presented For Review is as fol-

lows : :

“Whether a State Constitutional provision which dis-

tinguishes between corporations and natural persons

for the purposes of imposing an ad valorem tax on

personal property violates the equal protection clause

of the fourteenth amendment?”.

With but one qualification we accept that statement. We

would rephrase the question at issue as follows:

“Whether a {

tinguishes een corporations and natural persons

for purposes of imposing an ad valorem tax on per-

sonal property, a@ distinction based solely on owner-

ship by one as a corporate person and the other as a

ay fee

natural person, violates the equal protection clanse

of the fourteenth amendment.”

In this narrow frame of reference it vaisiine ae

at the outset to review the findings and conclusions of the

Illinois Supreme Court in its opinion in Lake Shore Auto

Parts Co. v. Korzen, 49 Ill. 2nd 137, 273 N.E. 2nd 592

(1971), supporting its construction of Article IX-A of the

Illinois Constitution of 1870. The Illinois Attorney Gen.

eral correctly concedes that that court’s “interpretation

of the meaning of Article IX-A is controlling for the pur.

pose of determining the issue raised here.” See Brief, p. 9,

It is equally clear that the construction by the Illinois

Supreme Court which is binding here embraces not only

the meaning of the particular words of Article IX-A but

also the Illinois Supreme Court’s consideration of legisla.

tive history, relevant contemporaneous events, questions of

state policy and other interpretative factors reflected in

its opinion. In a long line of cases based on principles of

federalism, this court has held that it will be bound by

authoritative construction by the highest state court of a

state constitutional or statuory provision. See Fairfield

v. County of Gallatin, 100 U.S. 47, 50-52 (1879) ; Cramp v.

Board of Public Instruction, 368 U.S. 278, 285 (1961);

Kedroff v. St. Nicholas Cathedral, 344 U.S. 94, 99 (1952);

Winters v. New York, 333 U.S. 507, 514 (1948) ; Highland

Farms Dairy, Inc. v. Agnew, 300 U.S. 608, 613 (1937);

Hebert v. Louisiana, 272 U.S. 312, 316-317 (1926); First

National Bank of Garnett v. Ayers, 160 U.S. 660, 664-665

(1896); Polk’s Estate v. Wendall, 13 U.S. 87, 98 fies

(Marshall, C.J.).

Salient parts of the opinion of the Illinois Supreme -

Court written by Mr. Justice Walter V. Schaefer which

conclusively support our definition of the issue are as

follows :

\ (a) “We have examined the other materials* to

which the Maynard and Shapiro plaintiffs have re-

ferred, but have found nothing which persuades us

that the words of article IX-A should be given any-

thing other than their natural meaning”. (App. p. 28)

(b) “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”. (App. p. 28)

the purpose of imposing a property tax by valuation,

: - upon a basis that does not depend upon any of the

; characteristics of the property that is taxed, or upon

the use to which it is put, but solely upon the owner-

ship of the property. If the property is owned by

A, it is taxable; if it is owned by B, it cannot be

taxed”. (App. p. 29)

(d) “It cannot rationally be said that the prohibi-

tion promotes any policy 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 €qual force in favor of the abolition of that tax

upon the property owned by others”. (App. pp. 31-32)

*The reference here is to comprehensive materials and

arguments involving legislative history, administrative in-

terpretations, contemporaneous developments and other

interpretative factors which these amici, as Maynard

plaintiffs below, alternately argued and which Shapiro

plaintiffs also presented to show that the words “as to

individuals” should be construed so as to establish classifi-

cations based on the nature and use of personal property.

Lie liane

(e). “For the purpose of a tax by valuation upon the

ownership of real or personal property, the identity

of the owner is a neutral consideration, as is his

status as sole proprietor, joint tenant, tenant in com.

mon, partner (Ill. Rev. Stat. 1969, ch. 10614, par. 25),

limited partnership (Ill. Rev. Stat. 1969, ch. 106%,

par. 61), member of a professional service corporation

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

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

10614, par. 101 et seq.; see Sup, Ct. Rule 721, Ill. Rey,

Stat. 1969, ch. 110A, 4 721; 43/Ill. 2d R. 721).” (App,

p. 32) /

The foregoing determinations are definitive and final in

the review of this case. Petitioners do not argue, nor

could they reasonably argue that this Court should now

reverse its long established rule giving conclusive effect

to construction of a state’s constitution and statutes by

its highest court. Thus review of the decision in Lake

Shore Auto Parts Co. v. Korzen, 49 Tll.2d 137, 273 NE.

2d 592 (1971) should proceed on the accepted premises

(a) that the Illinois tax is sought to be imposed on cor.

porate persons solely by reason of the fact that they are

corporate persons and that natural persons are sought to

be exempted solely because they are natural persons; (b)

that the classification does not depend on any character.

istics of property sought to be taxed or upon the use to

which the property is put; also (c) that no reasonable and

substantial state policy exists which was sought to be

served by the discriminatory method of taxation provided

in Article [X-A.

The Illinois Supreme Court adopting these premises as

controlling held that the resultant discrimination against

corporate entities violated the equal protection clause of

the Fourteenth Amendment. In light of the settled legal

principles hereinafter set forth~governing the interaction

in ie

of a state’s power to tax and the limitations imposed there-

on by the Fourteenth Amendment, the decision of the IIli-

nois court is clearly correct and must be affirmed.

Though the decisions of this Court have indicated that

the goals of the Fourteenth Amendment are “substantial

equality and fair equivalence” in the imposition of tax

burdens, Concordia Fire Ins. Co. v. Illimois, 292 U.S. 535,

547 (1934); 16 C.J.S. Constitutional Law §520, the states

have never been bound by hard and fast rules. Precise

equality in all situations is not required and states may,

under proper circumstances, classify persons, property and

occupations, subjecting different classes to dissimilar tax

treatment.

Despite this broad latitude, the equal protection clause

serves to insulate corporations as well as natural persons

from arbitrary and unreasonable tax treatment by the

states. Royster Guano Co. v. Virginia, 253 U.S. 412 (1920);

Pembina Consolidated Mining and Milling Co. v. Pennsyl-

vania, 125 U.S. 18% (1888). The parameters of the amend-

ment’s restraint on the states’ ability to classify for tax-

ing purposes have been restated by this Court on numer-

ous occasions. Thus in Allied Stores of Ohio, Inc. v.

Bowers, 358 U.S. 522 (1959), this Court said pp. 526, 527:

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

ing power, are subject to the requirements of the

Equal Protection Clause of the Fourteenth Amend-

ment. But that clause imposes no iron rule of equality,

prohibiting the flexibility and variety that are ap-

propriate to reasonable schemes of state taxation. The

State may impose different specific taxes upon differ-

ent 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,

a= 13

use or value. Bell’s Gap. R. Co. v. Pennsylvania, 134

US. 232, 237; Magown v. Illinois Trust € Savings

Bank, 170 U.S. -283, 293; * * * State Board of Taz

Comm'rs of Indiana v. Jackson, 283 U.S. 527, 537. ‘To

hold otherwise would be to: subject the essential tax. -

ing 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 as.

sure.’ Ohio Oil Co. v. Conway, supra, 281 U.S., at 159,

. “But there is a point beyond which the State can-

not go without violating the Equal Protection Clause.

The State must proceed upon a rational basis and

may not resort to a classification that is palpably ar.

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

classification ‘must rest upon some ground of differ.

ence having a fair and substantial relation to the ob-

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

US. 415; Louisville Gas ¢ Electric Co. v. Coleman, 277

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

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

230, 240; Ohio Ou Co. v.- Conway, 281 U.S. 146, 160

* * *.” (Emphasis supplied)

One of the most comprehensive summations of the perti-

nent equal protection considerations, emphasizing the

necessity of rationality and fairness in classification, is

that of Mr. Justice Brandeis, dissenting in Quaker City

Cab Co. v. Pennsylvania,’277 U.S. 389, 406 (1928) :

In passing upon legislation assailed under the equal-

ity 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 situated 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 permissible functions of

Sa]

the State; and that the difference must bear a rela-

tion to the object of the legislation which is substan-

tial, as distinguished from one which is speculative,

remote or negligible. (Emphasis supplied.)

We believe that this court in reviewing the decision of

Mr. Justice Walter V. Schaefer of the Illinois Supreme

Court will agree that the classification attempted in Arti-

ce IX-A does not rest ‘upon a differeriag which is real’

nor is it supported by a policy which is within the permis-

sible functions of the State. On the contrary we believe

this Court will find the arguments put forward to sup-

port the discrimination against corporate persons to be

‘specious’ and ‘fanciful’.

In our considered judgment reversal of the decision of

the Illinois Supreme Court herein as sought by petitioner

would directly necessitate abandonment by this Court of a

doctrine which has been settled for nearly ninety years

and consistently relied on by lower Federal courts, state

courts, state legislative and other governmental units.

We refer to the long established doctrine that an ad valo<

rem property tax may not be imposed by a state which

discriminates against property owners solely by reason

of the fact that they are corporations. Such a classification

is per se unreasonable and constitutes a deprivation of

the equal protection of the laws guaranteed by the Four-

teenth Amendment to the United States Constitution.

A leading writer states this rule in the following lan-

guage:

“Classification for exemption purposes may be based

on the use to which property is devoted, as well as

the nature of the property; but property cannot be

exempted merely because of its ownership where the

same kind of property owned by others is taxed... ,

Pee Bn, ot eae

glee eee,

jin elites

Instead of classifying property for the purpose of

exemption either by its characteristics or by its uses,

the legislature cannot classify the owners of property

according to some characteristic possessed by them,

or connected with their conduct, and thereupon base

an exemption of the property of such persons, regard.

less of the characteristics possessed by it and of the

uses to which it is put.” 1 Cooley on Taxation (4th

ed.) Para. 280, p. 594.

Corporations, due in large measure to the “artificial

nature” of their existence at the sufferance of the states,

have been forced, in some instances, to bear a greater

proportion of the tax burden than individuals. White River

Lumber Co. v. Arkansas, 279 U.S. 692 (1929); Flint vy.

Stone Tracy Co., 220 U.S. 107 (1910); Home Ins. Co. y.

New York State, 134 U.S. 594 (1890). However, classifica-

tions where the only perceivable distinction has been cor-

porate as opposed to individual ownership of property

have been consistently struck down.

In the landmark California Railroad Tax cases, San

Mateo Cty. v. Southern Pac. R. Co., 13 F. 722, app. dis- -

missed per stip., 116 U.S. 138 (1885); Santa Clara Cty v.

Southern Pac. R. Co., 18 F. 385, aff’d on other grounds,

118 U.S. 394 (1886), the California Constitution directed

that for tax purposes the assessed value of all real estate

be reduced by the amount of outstanding mortgages—ex-

cept for property held by railroads and other quasi-public

corporations. Finding thé discriminatory treatment of

the railroads violative of the Fourteenth Amendment, Jus-

tice Field held that the California law was invalid because

it did not provide for “. . . a different rate of taxation

for different kinds of property, but for unequal taxation

according to the character of the owner.” [Emphasis sup-

plied.] 13 F. 722, 738,

cic:

The tax invalidated in the California Railroad Tax cases

was not a franchise or privilege tax upon the continued

existence of the railroad corporations. Jd. at p. 754. Jus-

tice Field noted, td.; that while a State may exclude cor-

porations altogether, it may not require corporations to

forego federal constitutional rights as a condition of con-

tinuing business. It is upon these cases that the Quaker

City doctrine has been built.

In McHenry v. Alford, 168 U.S. 651 at 666 (1898), this

court reviewed a case concerning the exemption from taxa-

tion of certain lands held by railroads, and stated:

“. . . we agree that property of the same kind and

under the same condition and used for the same pur-

pose cannot be divided into different classes for pur-

poses of taxation and taxed by a different rule simply

because it belongs to different owners ....

In 1928 the landmark case of Quaker City Cab Co. v.

Pennsylvania, 277 U.S. 389 was decided by a divided court,

the majority holding unconstitutional on equal protection

‘ grounds a Pennsylvania statute which taxed incorporated

taxicab companies on their gross receipts while wholly

exempting the gross receipts of unincorporated taxicab

businesses. The court said (p. 402):

“Here the tax is one that can be laid upon Jesctitisin

belonging to a natural person quite as conveniently

as upon those of a corporation. It is not peculiarly

applicable to corporations, as are taxes on their capi-

tal stock or franchises . . . . The character of the

owner i the sole fact on which the distinction and dis-

crimination are made to depend. The tax is imposed

merely because the owner is a corporation. .. . It fol-

lows that the section fails to meet the requirement

that a classification, to be consistent with the equal

protection clause, must be based on a real and sub-

stantial difference having. a reasonable relation to the

subject of the legislation.” (Emphasis added).

ORE ET Eee

LP RAMEN KITT EE BARI AE TUTE RE RENT SH

ills.

The sharp issue drawn by the three dissenting Justices

in the Quaker City Cab case is explained by their differ.

ence with the majority concerning the nature of the tax

sought to be imposed by Pennsylvania on business re.

ceipts. They viewed the tax not so much as One On prop. _

erty but rather as an excise or privilege tax. Obviously

in such a posture ‘privilege’ not ‘ownership’ would be the

key to permissible classification and the distinction be. .

tween natural persons and corporations. It is indeed

doubtful that there would have been any dissent in that

case had the tax been a clear-cut ad valorem property

tax as in the instant case. By inherent definition the

characteristics of ownership are totally irrelevant in the

ease of ad valorem property taxes. In the language of

Mr. Justice Brandeis’ dissent, ‘ownership’ can not pro-

vide a rational or ‘real’ basis of classification.

Similarly Mr. Justice Stone cast light on the meaning

of his dissent when a year following the Quaker City Cab

case he spoke for the majority of the Supreme Court in

Bromley v. McCaughn, 280 U.S. 124, 137 (1929) pointing

out that an excise or privilege tax may be imposed “upon

the exercise of one of the numerous rights of property but

eaclf is clearly distinguishable from a tax which falls upon

the owner merely because he is owner regardless of the

use or disposition made of his property”. (Emphasis sup-

plied) 1 ava.

2 Although the Equal Protection Clause of the Four.

teenth Amendment was not involved in this case, the state-

ment of Mr. Justice Stone is of significance since this

court has repeatedly held that the criteria for reasonable

classification of an excise tax under the Fourteenth

Amendment are comparable to the criteria under Article

I, Section 8, Clause 1 of the United States Constitution,

involved in Bromley v. McCaughm.

Feo Se wo FTF

ae ae ee. ee ee ee ae

— 17 —

The Quaker City Cab case has been followed in both

State and Federal courts which have accepted the con-

tinuing vitality of the principles there stated.

*The Quaker City Cab Company rule has been cited,

often with detailed excerpts, in over 100 state and lower

Federal court decisions as well as in at least 19 subse-

uent U. S» Supreme Court decisions. Among those cases

the following are either directly or tangentially relevant

and are therefore cited:

1. Federal Appellate

(a) Mayor & City of Baltimore vy. Williams, 61 F.

2d 374, 378-379 (C.C.A. 4, 1932) (denial to ex-

empt single railroad from property taxation) ;

(b) Franklin v. Carter, 51 F. 2d 345, 347 (10th Cir.,

1931) (no denial to tax dividend income to in-

dividuals only);

86 F. 2d 633, 635 (2nd Cir., 1936) ;

(d) Antilles Surveys, Inc. v. De Jongh, 358 F. 2d

_787 (3rd Cir., 1966) (no denial to impose gross

receipts tax exempting receipts attributable

solely to taxpayer’s personal services).

2. Federal District

(a) Northwestern National Ins. Co. v. Lee, 49 F. 2d

274, 278-279 (D. Ore., 1931) (disc. against for-

eign insurance co.) ;

(b) ai Triner Corp. v. Frank McCormick, Inc.,

11 F. Supp. 145, 147 (D. Minn., 1935)

3. State

(a) Arkansas Commerce Comm. v. Arkansas &

Ozarks Ry Co., 235 Ark. 89, 357 S.W. 2d 295,

299 (1962) ;

(b) Silver v. Silver, 108 Conn. 371, 143A. 244 (1928)

(dissent), affirmed 280 U.S. 117;

meyer, 275 Minn. 347, 147 N.W. 2d 358, 369-370

(1966) (dissent) ;

(d) Richter v. City of Lincoln, 136 Neb. 289, 285

N.W. 593, 598-599 (1939) ;

So i hte One ee OT ge ee ee

1 ;

Thus in a case substantially like the case at bar the

Kansas Supreme Court invalidated on equal protectiog

grounds a statute which subjected corporation-owned

cemetery lands to taxation, while it exempted such lands

when owned by individuals. Relying heavily on the

Quaker City Cab case to hold that the 14th Amendment

forbids unjust discrimination between individuals and

corporations in respect to taxation of their properties,

? (Continued)

(e) Weimer Storage Co. v. Dil, 143 N.J.E. 307, 14

A. 438, 441 (1928) ; a i

(f) Wiramal Corp. v. Directors of Dwiston of Tar-

ation, 36 N.J. 201, 175 A. 2d 631, 637 (1961);

(g) Community Public Service Corp. v. New Mezico

Public Service Comm., 76 N.M. 314, 414 P. 2d

675, 678-679 (1966), cert. den. 385 U.S. 933;

(h) Methodist Book Concern v. Galloway, 186 Ore.

585, 208 P. 2d 319, 322-323 (1949) ;

i() Redfield v. Norblad, 135 Ore. 180, 292 P. 813,

820 (1930), reh. den. 295 P. 461;

(j) City of Philadelphia v. Deputy, 431 Pa. 276,

244 A. 2d 741, 744 (1968) (dissent) ;

(k) Martin v. Richardson, 160 S.C. 370, 158 SE.

731, 733 (1931) ; é

(1) Xepapas v. Richardson, 149 S.C. 52, 146 SE.

686, 691 (1929) ;

(m) Group No. 1 Ou Corp. v. Sheppard, 89 S.W.

2d 1021, 1025 (Tex. Civ. App., 1935);

(n) State v. Standard Oil Co., 130 Texas 313, 107

S.W. 2d 550, 558 (1937);

(0) Aberdeen Savings & Loan Assn. v. Chase, 157

Wash. 351, 289 P. 536, 541 (1930), reh. den.

290 P. 697;

(p) H. Rouw Co. v. Texas Citrus Comm’n., 241

S.W. 2d 231, 234 (Tex. 1952) .

But see: Pennsylvania v. Life Assurance Society of

Penna., 419 Pa. 370, 214 A. 2d 209 (1965), app.

dis. 384 U.S. 268; Spector Motor Service, Ine.

vy. Walsh, 135 Conn. 37, 61A.2d 89 (1948)

wnt ND

fhe Kansas court observed, Mt. Hope Cemetery*Co. v.

Pleasant, 139 Kan. 417, 32 P. 2d 500, 503 (1934):

“But it [the legislature] will have to tax all pri-

vately owned cemeteries alike; and it will not be

possible within the limits of our Constitution nor that

of the United States to enact a valid statute which

shall tax the plaintiff’s cemetery because its owner-

ship is vested in a corporation while exempting a

neighboring cemetery because the fee title thereto is

vested.in the bishop of the diocese.”

The discriminatory nature of the tax in the instant case

is even more pronounced. It taxes all corporations, but

no individuals.

A personal property tax with a similar discriminatory

classification was likewise invalidated under the 14th

Amendment in Garysburg Mfg. Co. v. Pender County, 42

F.2d 500 (E.D.N.C., 1930), rev’d other grounds, 50 F. 2d

732 (4th Cir., 1931) (failure to exhaust administrative

remedies; dismissed). North Carolina by statute taxed

stock in foreign corporations owned by domestic corpora-

tions, but it exempted stock in foreign corporations owned

by individuals. The court’s decision relied heavily on

Quaker City and the San Mateo and Santa Clara railroad

tax cases, which, to the court, made it obvious that the

tax created an unepnstitutional, substantial and arbitrary

discrimination ee an individual and a corporation.

Contrary to Petitioners’ implications, Quaker City Cab

is not the only ak Fourteenth Amendment decision

by this Court invalidating a state taxation scheme. In

Concordia Fire Insuranc? Co. v. Illinois, 292 U.S. 535

(1934), for example, this Court invalidated an Illinois

ad valorem personal property tax upon net receipts from

casualty insurance received by foreign fire insurance com-

Sle Sia i ns Se Dea a ky

= on

panies, but not upon net receipts from casualty insurany

received by foreign casualty insurance companies. Poin}.

edly, the Court noted, id. at p. 549:

“There is no basis or reason for making a distinetiq,

between them [companies] that has any pertinene

to the imposition of a property tax such as is jy

question. The net receipts which are taxed are not

different from those which are not taxed; and both

came from the same source. Such a discrimination

im respect of the taxation of real or tangible personal

property obviously would be essentially arbitrary, In

principle it is not different with the net receipts”

(Emphasis added).

See also: Hanover Fire Insurance Co. v. Harding, 21)

US. 494 (1926) (Illinois tax); lowa-DesMomes Bank y,

Bennett, 284 U.S. 239 (1931); Cumberland Coal Co. y,

Board of Revision, 284 U.S. 23 (1931); Louisville Gas ¢

Electric Co. v. Coleman, 277 U.S. 32 (1928); F. 8S. Royster

Guano Co. v. Virgmia, 253 U.S. 412 (1920).

Despite this showing of the vitality of the Quaker City

doctrine it is argued by those seeking reversal of the

Illinois Supreme Court decision that this case has been

undermined by certain subsequent decisions of this Court.

We now turn to a consideration of those cases cited by

them.

Most of the cases relied upon by Petitioners are dis

tinguishable in the framework of the proposition that the

tests of validity of taxes depend pon their nature. The

three general classes of taxes are ad valorem property

taxes, income taxes and excise taxes. Fourteenth Amend.

ment tests for one class of such taxes are not necessarily

appropriate for another class. Hence, a distinction valid

for one purpose will not necessarily be valid for another.

Lousville Gas & Electric Co. v. Coleman, 277 US. 32,

arses =

i — i

38 (1928). Ownership of property is not a relevant issue

in the case of excise and income taxes.

Property taxes, including taxes on the ownership of

property, are based upon value of property possessed in

a certain place at a certain time. These are direct taxes.

The value of similar property may vary based upon its

use. We assert that there is no rational difference in

property based solely on the nature of the owner, whereas

there can be differences in value based upon the use to

which that property is put, e.g., business or non-business

use.

Special property classification statutes based on use,

such as by railroads, other common carriers, utilities and

the like, generally are not denials of equal protection be-

cause of the peculiar use of the property, its protected,

quasi-public status, and special public policy considera-

tions—rather than ownership per se. Among the special

cases in this category erroneously relied upon by peti-

tiers as adverse to the Quaker City doctrine, is New

York Rapid Transit Corp. v. City of New York, 303 US.

573 (1938). This Court there held that a special New

York tax on utilities and common carriers did not deny

equal protection, since these entities enjoyed special status

“including relative freedom from competition.” Jd., p. 579.

Such taxation is justified under the Fourteenth Amend-

ment essentially as a matter of fair equivalence.

Excise taxes are not direct taxes. These taxes essen-

tially are levied incident to the enjoyment of a privilege,

engagement in an occupation, or performance of an act.

Since a State under its police power may prohibit such

enjoyment, engagement or performance, it is empowered

to impose restrictions or special burdens by taxation.

ions As

Among the excise tax decisions erroneously relied upo

by petitioners is Ft. Smith Lumber Co. v. Arkansas, %j

U.S. 532 (1920). An Arkansas statute imposed a tax upo

capital stock held by a domestic corporation in other oy.

porations, while individuals holding such stock wer

exempt. This Court found no denial of equal protection,

The State, within the permissible public policy of dis.

couraging the holding of stock by one corporation in ap.

other, essentially imposed an excise upon enjoyment of

that privilege. A second distinguishable excise tax deg.

sion is Flint v. Stone Tracy Co., 220 U.S. 107 (1910) (5th

Amendment; federal excise tax). The Court therein ¢,.

tablished that an excise tax may reasonably be imposed

upon corporations alone. The principle of fair equivalence

operates in this category also.

Taxes upon income are not imposed upon property, and

may or may not be tied to privilege, occupation or per.

formance of an act. These are taxes upon the proceeds

arising from property or business, 7.e., upon the privilege

of earning or receiving income. While such a tax has

been classified an excise tax, it generally is not considered

a property tax, or tax on source. One case in the income

tax category relied upon by petitioners is Thorpe y,

Mahm, 43 Ill. 2d 36, 250 N.E. 2d 633 (1969). The Illinois

Supreme Court therein held that the new Illinois income

tax is not a property tax (id., 43 Ilk 2d at 42); also that

the tax, which imposed a higher tax rate upon corpor-

tions than the rate on individuals did not violate equal

protection, because of “sufficient differences between the

privilege of earning or receiving income as a corpo

rate entity and .. . as an individual.” Jd., at page 47. The

Court also found substantial statutory differences in tax

treatment, e.g., allowable deductions, between corpors-

yd “aw wv pa” ow —_

the legislature is expected to make no discrimination”.

on ee

tions and individuals tending to bring about a parity

of burden.

Other excise and income tax cases and special property

classification cases cited by petitioners are similarly dis-

tinguishable.

Another type of case relied upon by Petitioner is to

be distinguished because it involved overriding public

poliey considerations which rendered the discrimination

permissible. Allied Stores of Ohio, Inc. v. Bowers, 358

U.S. 522 (1959), involved an Ohio ad valorem tax on the

contents of Ohio warehouses, but exempted from taxa-

tion such property held for storage only, if owned by non-

residents. The discrimination favored non-residents as

against residents, not individuals as against corporations.

The Court upheld the statute on Ohio’s overriding public

policy of encouraging industry, id., at p. 528:

«',.. a statute which encourages the location within

the State of needed and useful industries by exempt-

ing them, though not also others, from its taxes is not

arbitrary and does not violate the Equal Protection

Clause of the Fourteenth Amendment.”

Aled Stores involved no classification based upon owner-

| ship per se.

A different but equally justifying public policy consider-

ation was found in White River Co. v. Arkansas, 279 U.S.

692 (1929). An Arkansas statute provided for collection

of back taxes from corporations, but not individuals, on

property which escaped equitable taxation due to inade-

quate or insufficient valuation. The Court observed that

} a back-tax statute differs from “an ordinary tax law in

which there may be some foundation for the claim that

wea RES

Soh cesta ath eth ce oad ae

oe NN

Id., at p. 697. The Court expressly distinguished Quaker

City Cab Co., supra, on that ground and found no denia)

of equal protection. Id., at pp. 696, 699.

Summarizing, in all of the cases relied upon by peti.

tioners, a reasonable ground (not arbitrary as here) for

the classification existed and usually the discrimination

rested upon a showing of fair equivalence or strong public

policy. No such grounds exist and no such state policy

is discernible in the instant case as we will next show.

II.

NO VALID PUBLIC POLICY SUPPORTING THE

PROPOSED DISORIMINATION AGAINST CORPORA.

TIONS CAN BE FOUND IN THE LEGISLATIVE

HISTORY OF ARTICLE IX-A READ ALONE OR BD

CONJUNCTION WITH THE NEW CONSTITUTION OF

1970 OR THE DELIBERATIONS OF THE CONSTITU.

TIONAL CONVENTION WHICH DRAFTED IT.

Neither Petitioner, nor any other party herein, seriously

contends that the personal property tax sought to be im

posed solely on corporations by the constitutional amend.

ment is an excise, privilege, occupation or special property

classification tax. Thus Petitioner’s dilemma short of urg.

ing total abandonment of equal protection for corp-

rate persons, is to attempt to justify the discriminatory

classification by asserting it to be based on or in further.

ance of a valid state policy. Petitioner strains hard, and

unsuccessfully, to find such a valid state policy.

(a) Petitioner first contends that the “basic purpose

of the Article was to eliminate individual personal prop

erty tax in Illinois—a tax which even opponents of Arti

cle IX-A admit is discriminatory, unfair, almost impossible

ae,

to administer and economically unsound.” Brief, p. 13.

Of course, the intent of the constitutional amendment is

clear on its face and was explicitly stated in the Explana-

tion of Amendment (App. p. 19) as follows: “The Amend-

ment would abolish the personal property tax by valua-

tion levied against individuals.”

This demonstrates no valid policy justification what-

ever, only an acknowledged intent to discriminate. Peti-

tioner’s first attempt to find policy thus begs the question;

i is to say that the discrimination against corporations

is permissible because it was intentional.

Such a purpose would be unexceptional and within the

power of the legislature and the electorate only if in-

dividuals alone had been subject to the tax in the first

place. Petitioner’s less than careful references to the

asserted purpose of eliminating “the individual tax” and

to eliminate “individual personal property tax in Illinois”

(Brief p. 13) somewhat casually overlook the fact that

prior to the adoption of the new constitutional provision

all personal property in Illinois was subject to tax. The

constitutional amendment did not alter the definition,

classifications or rate of assessment; its only effect was

to exempt a certain class of owners from payment of a

pre-existing tax and to leave corporate persons alone

subject to the tax.

| Petitioner’s quite candid explanation is that the discrim-

ination is justified by the comparative ease of collection

_ against corporations of a tax described by petitioner as

“discriminatory, unfair, almost impossible to administer

and economically unsound”. Petitioner is thus urging that

Illinois be allowed to classify corporations because they

and not individuals are “readily identifiable” and thus

Susceptible to coercive measures with respect to payment

eR Ce ieee

— ,

of taxes. Brief p. 13-14. No court has ever sanctioned

such a distinction as being consonant with equal protes

tion.

(b) The legislative history affords no foundation for

Petitioner’s gratuitous assertion that the purpose of Ar

ticle [X-A was “to encourage the delegates to the state

constitutional convention which was then in session” t

revise the Illinois tax’system. Contrary to that assertion,

the convention was not in session either at the time of

the drafting of Article IX-A or the referendum of Noy,

3, 1970, when the amendment was approved by the ele.

torate. In fact at the time of legislative adoption of

Senate Joint Resolution 30 the delegates had hot yet

been chosen.

There is not a scintilla of evidence in the record to sng.

gest that the legislature, in adopting Article IX-A on

June 30, 1969 had as its high motive the instruction and

encouragement of then unchosen delegates in the merit

and virtue of revenue reform. With th and less.

than-popular Illinois income tax about to become effective

August 7, 1969 it would be more plausible to speculate

that S.J.R. 30 (Art. [IX-A) when adopted by the legisla.

ture was intended to relieve political pressures result-

ing from the income tax by offering individual voters

exemption from personal -biatiins tax as at least a partial

off-set.

If, for purposes of present argument, ‘encouragement’ of

‘reform’ is accepted as the legislative goal, one can only

observe that such a goal would scarcely be advanced by

discrimination between corporations and individuals. A

tax scheme is neither modernized nor reformed when a tax

acknowledged to be unjust is discriminately maintained

against one class and removed from another. <A constitu-

— ea

tion ought not to play favorites among classes of tax-

payers.

Actually the official statement accompanying the pro-

Amendment when submitted to the electorate dis-

closed no intention whatever that in the future the per-

sonal property tax as to corporations would be ended.

In fact, the Explanation accompanying the Amendment

explicitly stated that the tax on corporation would not be

affected (App. p. 19). Actually that was a candid and

correct admission since the subsequent Convention’s deci-

sion concerning personal property taxes could not be

known or forecast.

state policy Petitioner argues that since “(i)t was finan-

dally impossible to totally abolish the tax immediately,”

(Brief p.“21) and since the tax was effectively adminis-

tered as to corporations but not as to individuals (Brief

p. 21), therefore, it was “reasonable” to exempt only in-

dividuals from liability. The clear import of this reason-

ing, especially since the “reform” was submitted for ratifi-

cation to the very persons it would benefit most, is that

the Illinois legislature wished to have the best of two

worlds; namely to take a politically popular action by re-

moving the tax as to individual voters without sacrificing

substantial revenues needed by the schools and munici-

palities of the state. Corporations, defenseless at the polls

and the source of the bulk of the property tax receipts,

would continue to be liable.

A state “policy” of this description can hardly he. said

_to validate a discrimination so clearly in violation of the

equal protection clause. Not surprisingly the constitu-

tional amendment was approved by an “overwhelming

majority” vote as Petitioner finds comfort in pointing

out. Brief p. 21. That is no answer. Political popularity

cannot cloak a denial of equal protection with Validity

Equal protection can not be denied even by overwhe

vote. Lucas v. 44th General Assembly, 377 US. 713, 1%.

737 (1964).

(d) Petitioner also urges that since the Illinois Cop.

stitutional Convention, and subsequently the electorate

did adopt a provision which would eventually eliminat

all personal property taxes by 1979, Illinois Constitutig,

of 1970, Article IX, sec. 5(c), the prior Article IX.4

amendment of the old Constitution must be seen as: the

“first step” in a comprehensive plan of reform. Pei.

tioner’s Brief at 14. This after-the-fact rationalization

is not supportable.

Petitioner would justify the invidious discrimination

implicit in the constitutional amendment by urging upm

- this court that there is a public policy in Illinois which

looks to ultimate abolishment of all ad valorem personal

property taxation. That such a long-range policy exists is

clear; that such a policy cannot justify and was not in.

tended to justify violation of the equal protection clause

is equally clear. Petitioner asserts (and the State’s Attor.

ney of Cook County makes a similar argument—see Part

IV hereof) that Article IX-A was the initial step in a pro.

gram of the new Constitution to end all such taxation by

1979. These interpretations are at the best but half

truths and petitioners are totally in error if they mean

to assert that the new Constitution mandated immediate

abolishment of individual personal property taxes. To

the contrary, the new constitution carries forward only

such individual exemptions under Article IX-A as shall

ultimately be defined and held valid by the courts. That,

ne He

of course, is what the present case is all about and

hence petitioners beg the question by their circuitous argu-

‘> ment. The convention was fully aware of the ‘equal pro-

convention chose neither to accept nor to reject Article

Ix-A. It followed the middle-course of Sec. 5(c) of

Article IX hereinafter quoted.

On.

it, B The delegates to the Sixth Illinois Constitutional Con-

ate [ vention were aware of the. existence of the legislative

ion enactment which was to become Article IX-A. The Con-

A vention adopted the proposed constitution on September

the FF 43, 1970. Two months later the voters would pass on Arti-

ti: B cle IX-A. The Convention delegates accordingly were re-

in quired to give thought to the effect of the adoption of

- SArticle IX-A upon the proposed new Constitution. The

; *tonvention could have ignored the amendment to the

on & (1870 Constitution and provided for it to lapse at the ef-

ch fective date of the new Constitution. It was felt, however,

| that since public consideration of the amendment would

in-

Ise

take place shortly before the submission of the new Con-

stitution the effect of its likely adoption should be pro-

vided for in the future organic law of the state. This

latter view prevailed in the convention and is reflected in

" Section 5 of Revenue Article IX of the 1970 Constitution:

Nata ak ae

r0- (a) The General Assembly by law may classify :

by & personal property for purposes of taxation by valua- F

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

authorize the levy of taxes in lieu of the taxation

‘i of personal property by valuation. :

To (b) Any ad valorem personal property tax abol- i

rt ished on or before the effective date of this Con- f

i stitution shall not be reinstated. 4

af (ec) On or before January 1, 1979, the General :

Assembly by law shall abolish all ad valorem personal ~ ~

sine Stiiicens

property taxes and concurrently therewith shall »

place all revenue lost by units of local gove

and school districts as a result of the abolition g

ad valorem personal property taxes subsequent t

January 2, 1971. Such revenue shall be replaced by

imposing statewide taxes, other than ad valorey

taxes on real estate, solely on those classes relieya

of the burden of paying ad valorem personal pro

taxes because of the abolition of such taxes subsequent

to January 2, 1971. If any taxes imposed for gy)

replacement purposes are taxes on or measured by

income, such replacement taxes not be considera

for purposes of the limitations of one tax and the

ratio of 8 to 5 set forth in Section 3(a) of this

Article.

These three sections are also in a real sense a egp.

temporaneous interpretation of the limited scope of

Article IX-A in providing as they do for (1) continuation

of taxation of personal property, with provisions for

classification and abolition of any or all classes; (2)

the provision of subparagraph (b) upholding any abolition

of ad valorem personal property taxes occurring in con.

sequence of the constitutional amendment prior to the

effective date of the 1970 Constitution, and (3) the de

tailed provisions for ultimately “phasing out” all remain.

ing personal property taxation on or before January

1, 1979, subject to the replacement of lost revenue by

forms of taxation other than real and personal property

taxes on the same classes of taxpayers relieved of per.

sonal property taxation after January 2, 1971.

Thus, throughout its deliberations, the Constitutional

Convention was faced with a severe drafting dilemma

It was necessary for it either to structure any revenue

article of a new constitution with concern for the meaning,

application and legal effect of the pending constitutional

er ea Re ie A od

ee) ee ee

dais

amendment—matters which were anything but clear; or it

could proceed to draft new provisions with total disregard

of the pending proposition—a course publicly unaccept-

able. The difficulty was also compounded by the doubts

which existed concerning the interpretation of the word

“individuals” as used in the amendment and doubts con-

cerning the constitutionality of particular interpretations

under the equal protection clause. A measure of the un-

certainty felt by many delegates to the Convention was

aptly expressed in floor debate by Stanley C. Johnson, a

member of the Revenue Committee, who stated:

“Mr. President, the amendment in November is

. douded with so much uncertainty as to its application

that we will be years, we fear, trying to figure out

what it really means. There have been opinions

registered that it will not apply to joint tenants, that

it will not apply to trusts, that it will not apply to

partnerships. Certainly it will not apply to corpo-

rations. So that it may eventually boil down to what

it applies to is whether or not the property is used

in the production of income or not.” (June 25, 1970,

Transcript Vol. 74, p. 11)

Professor Dawn Clark Netsch, who served as Vice

Chairman of the Revenue Committee (referring to Sec-

tin 5(b) of Article IX of the Constitution of 1970,

hereinabove quoted) writing in the November, 1970 issue

of the Chicago Bar Record, p. 114:

“The coverage of this subsection depends, in turn,

on the coverage of the proposed November amend-

ment abolishing the tax ‘as to individuals’. Presum-

ably, the courts will have settled these questions by

the time the personal property tax is finally elimi-

nated in 1979. If the courts should decide—possibly

to avoid equal protection issues—that an individual

engaged in a retail grocery business as a sole pro-

sina SD cs

prietorship is not relieved of paying the persom

property tax pursuant to the November referendy

because his competitor down the street, who is

corporated, is not relieved, that business individny

would be picked up by subsection (c) and reheve

of the tax in the second phase-out. He would tha

be liable for a share of the replacement tax.”

Delegate Malcolm S. Kamin in his article “Constit,

tional Abolition of Ad Valorem Personal Property Tare,

60 Ill. Bar Journal, p. 432 at 434 writes: :

“Tt was generally agreed that the voting public wou

pass this amendment, whatever its precise meani

Thus, one must consider that throughout debate »

the Revenue Article, every delegate probably had in

mind that members of the public would be expressing

themselves in overwhelming favor of Article IX-4

at about the same time they were being asked to vot

on the product of the Convention.”

In this context of timing problems and uncertainties

as to meaning and legality the Convention drafted a co.

stitutional program, subsequently approved by the voters,

which provided for legislative phasing out of all adv.

lorem personal property taxation by 1979, with safe.

guards to avoid disastrous results to the public schook

and municipal services. The program did not mandate

the immediate exemption of individuals from person

property taxation as suggested by petitioners. It merely

provided for the recognition of such abolition of individu

personal property taxation, if any, as the courts woul

determine to have occurred under the preceding constitv

tion as amended by Article IX-A.

Even if the Convention had sought to incorporate Arti

cle IX-A into the new constitution, which petitioners er

ors a

roneously contend was the case, it is obvious that such an

incorporation could not validate a provision repugnant

to the 14th Amendment of the Federal Constitution. The

Cook County State’s Attorney in effect is really arguing

that even if Article IX-A creates an unconstitutional

exemption, that defect will be cured in the course of 8

years as everyone becomes exempt. No cases or theories

can be cited to support such an ephemeral and transitory

view of equal protection. -

oe eke Tr Oe Ee

The basic question remains unaffected by the new

Illinois Constitution. That question is whether or not the

creation of a given classification of property taxpayers

fnds its justification in more than a desire to free one

_dass from taxation while imposing a property tax upon

oe rProwe ras =

the Illinois General Assembly pursuant to Article IX,

Section 5(a) of the new Constitution will be similarly

tested under Federal standards. The adoption of Section

i(c) obviously did not validate the unconstitutional Arti-

de IX-A. ™

From the foregoing it is clear that no valid state policy

exists to justify the patent discrimination against corpo-

rations and that petitioners’ efforts to find such & policy

wholly fail. It is equally clear that the Illinois Supreme

Court was correct when it found: “It cannot rationally

be said that the prohibition promotes any, policy other

than a desire to free one set of property owners from the

burden of a tax imposed upon another set.”

Ce Be ae oe Se Oe ee

: ‘ p

another. Certainly any future classification adopted by -

ee 3

MET ae BS Ah

SETA RE De RHE PINT CER

sine

Ii.

THE REVERSAL OF THE ILLINOIS SUPREM

COURT’S OPINION WOULD END EQUAL PROTE

TION OF THE LAWS FOR CORPORATE

AND WOULD HAVE VASTLY DESTRUCTIVE LEGal,

SOCIAL AND ECONOMIC CONSEQUENCES.

We have shown in the first two argument- headings of

this brief that the Illinois Supreme Court conclusively

determined the purported exemption for “individnal’

' contained in Article IX-A applied to all non-corporate

persons and that no valid policy consideration exist

for this distinction between property owned by individuak

and property owned by corporations for the purpose of

' taxation. We have also shown that a long line of case

would prohibit such a classification based upon equl

protection grounds. A series of-cases has been cited ex.

tending over a period of 90 years which exemplify this

rule. However, both realistic jurisprudence and this

Court’s granting of certiorari in this case indicate that

mere reliance upon the existence of long-standing rules

may not be in itself sufficient to prevail. Therefore,

these amici do contend in this brief that the. judgment

of the Illinois Supreme Court is not only in accordance

with the rule of stare decisis but also continues constitv.

tional protections in an area where such protections ar

practically desirable. In short, corporations “ought” to

be accorded the equal protection upon which they hare

relied for so long. An analysis of this issue requires

a consideration of the evolution of constitutional rights

accorded to corporations in this country.

The American concept of equal protection extends from

the basic American ideal of fairness. Bolling v. Sharp,

347 U.S. 497, 499 (1954). At common law, the term

wis cas

“person”, including both natural persons and artificial

persons, generally included corporations. Louisville, C. &

(. R. Co. v. Letson, 43 U.S. 497, 555, 558-559 (1844). The

Supreme Court of the United States quickly reached

the same definition of “person” in construing the equal

protection clause of the 14th Amendment. Santa Clara

County v. Southern Pacific R. Co., 118 US. 394, 396

(1886). The Court stated in Gulf, Colorado ¢ Sante Fe

Ry. Co. v. Ellis, 165 U.S. 150, 154 (1897):

“The rights and securities guaranteed to persons by

that instrument cannot be disregarded in respect to

these artificial entities called corporations any more

than they can be in respect to the individuals who are

the equitable owners of the property belonging to

such corporations. A State has no more power to

deny to corporations the equal protection of the law

than it has to individual citizens.”

a eee. eer

“=e ==

Perhaps because it is not a static concept, “equal pro-

tection of the laws” escapes precise definition, Louisville

Gas ¢ Electric Co. v. Coleman, 277 U.S. 32, 37 (1927).

This Court has construed the provision as a general re-

quirement that all persons and their property in similar

circumstances be treated equally by the State in its exer-

cise of powers, including the power of taxation. The

decision of the Illinois Supreme Court in the cases at bar

is consistent with this historical evolution of the Equal

Protection clause. A reversal of these decisions would

eliminate the sound, long-standing principle of equal pro-

tection that artificial and natural persons be treated

equally for property taxation purposes.

a ee) ee ee es ee

Thus in the decisions of this Court since 1844, in prin-

ciple, and since Quaker City, (1928) in fact, corporations

have been treated no differently than other “persons”

a ee ee ee

SASL EIGER NON oe eT eT A TNE

ee ae

regarding the imposition of ad valorem property ty

While reasonable classifications based upon the use or th

nature of property are allowable, the attempted creatin &

and discrimination against a class based solely upg

ownership alone has been held impermissible.

The petitioners and three of the respondents in this cay

ask this Court to take a constitutionally startling actin,

They seek the removal of equal protection guarantees fron

a class which by everyone’s admission, has previously bea

entitled to such protection. No case has been cited by an

party seeking reversal of the Illinois Supreme Cog

which even remotely provides authority for such a step

The history of the equal protection clause has been op

of expansion rather than withdrawal. Could the peti

tioners and their supporters reasonably contend that prop.

erty owned by Irish, Jewish, or Black persons should ly

taxed differently than that owned by other persons! }

such a formulation the question begs the answer. |

would be inconceivable that these groups, entitled as they

are to equal protection of the laws, could have such right

removed. The attempt to discriminate against corpom.

tions in this case is constitutionally indistinguishable fron

such an attack upon an ethnic, religious or racial group.

The petitioners, in effect, ask that corporations hene.

forth be declared and treated as “non-persons” for th

purpose of Federal constitutional protections. Such s

step would be totally out of keeping with basic constito

tional principles as well as prior rulings in Suprem

Court cases. While the principle of stare decisis may

not always carry the day, it is surely not likely to bk

ignored by this Court. One of the central elements in th

stability. of our legal system is the ability of citizens

to be free from abrupt and unheralded changes in th

law. In some instances a change can be foreseen based

upon & series of slight modifications of a given rule. The

rule expressed in the Quaker City Cab case is, however,

true black letter law.*

Such law has been relied upon by state and local taxing

authorities and by corporate and non-corporate businesses

as providing a norm of reference believed to have been

established with finality by this Court. Every state in

the union allows the levying of a local real property tax.

With the exception of Delaware and New York, every

other state in the country levies a personal property tax

of some kind- Corporations have reasonably relied in

their acquisition of billions of dollars of real and personal

_ property upon the fact that their property would be

treated no differently for tax purposes than identical

property held under other forms of ownership.

—.. aa ae ae

oe. er ae. ee. ee eee: ee eee ee

To reverse this rule after 90 years of stability would

bring about a change in the tax structure of this country

- by judicial action which would have destructive and waste-

ful effects. Small corporate businesses would be plated

at a serious economic disadvantage as against identical

| businesses operated under other ownership forms. Larger

| corporations would seek evasions of the unjust classifica-

tion by placing their property in the hands of natural

persons. All corporations would be required to react in

*“Unless specifically exempted, all corporate property,

real or personal, is subject to tax in the same nfanner as

if it were held by an individual. However, there must he

n0 discrimination as between individuals and corpora-

tins in the same class.” (Citing Quaker City Cab)

> [Prentice-Hall

———._ State & Local Taxes

All States Unit

Sec. 93, 638]

;

MSA

PREBLE PEELE VELL EISELE LS OEE SEG ENE |

— 38 —

various ways to their loss of constitutional protection,

None of these reactions would be helpful to econom:

growth.

The arguments in the cases at bar involve an Illinois

tax relied upon principally by school districts and th

exemption of natural persons from that tax. The im

plications of this case, however, effect every state in th

union and every business which operates in the corporate

form. If the Illinois Supreme Court be reversed, wide.

spread state experimentation in the creation of additional

burdens resting solely or differently upon corporations

will surely follow.

A prime example of such experimentation would h

the placing of the entire burden of ad valoren property

taxation upon corporations. While the cases at bar in

volve the imposition of a tax only upon personal prop

erty such a tax is indistinguishable in its equal prote.

tion implications from a tax upon real property. Thas,

if the property of corporate person$ may be taxed while

that of natural persons is exempt the same is true of real

property. Such a ruling would place corporate real prop

erty in a position where it might become the sole soure

of the 41% billion dollars in property taxes collected

each year by state and local governments. In the past

such governmental bodies have been somewhat restricted

in the nature and amount of such property taxes sine

they were payable by all property owners. The voters of

a community had a sure method of telling their elected

officials when the property tax burden had become too

high. Corporations however do not vote and as is pointed

out by the petitioners they generally pay their taxes

If a state legislature can answer the voters’ cry for more

funds by an increase in the corporate real property tar

it ean escape the citizens wrath at the polls. Stripped

of their equal protection guarantees in the area of real

and personal property taxation corporations become not

taxpayers but targets.

Once corporations have lost their equal protection clause

rights, the governmental experimentations in creating

special burdens will not stop at taxation. If a corporate

property tax is possible then there is no reason why

distinctions may not be made against corporations in the

exercise of the police power. Corporate owned property

might be required to comply with a different building

code or zoning ordinance than property held in a differ-

ent manner. Corporations could be required to pay state

and municipal fees in amounts different than fees pay-

able by natural persons for similar services. Corpora-

tions could be charged a higher rate for water, sewer

or electricity than a non-corporate user in the same

industry. Untold discriminations could and would result

if a class with many wealthy members were to suddenly

lose its constitutional guarantee of fairness and equality.

It is perhaps ironic that four medium or small school

districts in Illinois should be placed in the position of

arguing on behalf of all corporations in this country.

In this case, however, the perfectly proper legal interests

of these amici are identical to those of business corpora-

tions. These amici are not opposed to constitutionally

valid exemptions of personal property taxation. We

feel, however, that as guardians of the educational well-

being of the children of our school districts we have a

responsibility to see that all taxes validly imposed within

the state are collected and that improper exemptions are

contested. The interest of corporations is, of course,

fo pay no more taxes for real or personal property than

eat cae

OLS EME ORIOL LAIN NOL OM CH

— 49 —

any other owner of such property. In this case, thos

interests coincide.

It would surely be of interest to this Court that the

Illinois General Assembly has recently taken a substap.

tial step towards rectifying the constitutional errors which

we contend were committed in the drafting of Artick

IX-A. The Legislature, on June 13, 1972, passed Hon

Bill 4218. That bill provides a standard deduction for

personal property tax purposes of $5,000.00 of persona)

property owned by any taxpayer within the state, corp.

rate person or natural person. Whether such a device

escapes all constitutional infirmities is perhaps a question

for another court on another day. The fact remains,

however, that the creation of such a flat deduction, avail.

able to all taxpayers (both corporate and individual)

alleviates the obvious lack of equal protection apparent

from Article IX-A. The petitioners in this case argue a

if Article IX-A is the only way to free the citizens of

Illinois from a hated tax. The passage of House Bill

4218 and the mandate for the phasing out of of all per.

sonal property taxation contained in the 1970 Illinois

Constitution will shortly accomplish the sought after

goal in a constitutionally permissible manner. For wont

of such approach, the constitutional rights of corp.

rations throughout the country ought not be sacrificed

in the name of Illinois tax relief.

=—

IV.

THE ILLINOIS SUPREME COURT DID NOT IGNORE

og OVERLOOK THE NEW ILLINOIS CONSTITUTION,

aS ARGUED BY THE COUNTY OFFICERS, BUT

QORRECTLY CONCLUDED THAT THE BASIC FED-

ERAL QUESTION, INVOLVING VIOLATION OF THE

EQUAL PROTECTION CLAUSE, REMAINED UNAF-

FECTED BY THE ADOPTION OF THAT DOCUMENT.

In this section these amici direct their arguments to the

Petition for Writ of Certiorari to the Illinois Supreme

Court, filed by the State’s Attorney of Cook County on

behalf of Edward J. Barrett and other county officers.

The State’s Attorney has chosen to submit his Petition

for Writ of Certiorari as his brief in this court. These

amici attempted to meet the arguments raised by the

State’s Attorney in their previously filed Brief In Oppo-

sition to the granting of certiorari. Much of what follows

was submitted in that earlier brief but is set out here for

the convenience of the Court.

The petition for writ of certiorari, standing as the

brief of Edward J. Barrett, County Clerk of Cook County,

et al., is devoted almost completely to arguments concern-

ing the adoption of the Illinois Constitution of 1970 which

became effective several days prior to the rendition of the

opinion and judgment herein sought to be reviewed. With-

out explaining how the new Constitution remedied the in-

vidious discrimination implicit in Article IX-A of the

1870 Constitution and violative of the equal protection

clause, petitioners charge that the Illinois Supreme Court

ignored the new constitution, which in their view intro-

duced a new dimension in this case. In developing this

theme, they present a number of unsupported and irrele-

PRM IIIT SGT” CPOE IEE NERS Rite, NE een ae

vant variations. For example, in “Questions Presents

they gratuitously demand to know how “the highest cogy

of the state can ignore the existence of the new state om.

stitution . . . and circumscribe the extent of its examin

tion in determining the public policy of the state... p

They ask how the court could ignore the context in whig

Article [X-A of the prior constitution was adopted, cain.

ing the constitutional amendment which was held inyahi

was “the first step of the program provided in the ney

constitution for the eventual abolishment of the person

property tax.” They strongly imply that either by over.

sight (Pet. p. 39) or by deliberate design (Pet. p. 5)

the Illinois Supreme Court ignored its own precedents ani

failed to apply the law existing at the time of decision

in favor of the law existing at the time the case arose.

Petitioners even go so far as to argue that by failing t

mention the new constitution of 1970 in its opinion, the

Illinois Supreme Court “caused to be born . . . a substan.

tial federal question impelling this court’s consideration

. .” (Pet. p. 5).

We take issue with these arguments of the petitioners,

The contention that the Illinois Supreme Court ignore

or overlooked the advent of the Illinois Constitution o

1970 is totally unsupportable in point of fact. The peti.

tioners’ arguments that the Constitution of 1970 requires

validation of Article IX-A are likewise without merit in

point of law.

To argue that the Illinois Supreme Court and M.

Justice Schaefer in writing his opinion would ignore o

overlook such an important development in the suprem

law of the state as the taking effect of a new constitution

is scarcely plausible on its face. The facts are totally

the other way. Both in the briefs and in the oral argv

or a. Sa ae ee ae ee ee ee a

—

i Me

{

‘

“J

— oe

ments presented to that Court, the new constitution

was the subject of serious and repeated references by

counsel for the several parties. The leave granted to

these amici (as petitioners in Maynard No. 44308) in the

[linois Supreme Court to file as a matter of original

jorisdiction their petition for declaratory judgment, was

in response to their petition which recited the importance

of considering the new constitution, as well as the old,

in deciding the issues of the case and contained their

offer to make such a presentation to the Court. One of

the attorneys for the amici, Samuel W. Witwer, who par-

ticipated in the arguments before the Illinois Supreme

Court, served as President of the Sixth Illinois Constitu-

tional Convention, the body which drafted the new con-

stitution. Clearly the court was aware of the new con-

stitution and its provisions relating to personal property

taxation.

It should be-obvious that there is no rational basis for

concluding, as petitioners have done, that because the

court failed to mention the new Constitution in its opinion

it either ignored or overlooked the document. This basic

fact cannot be sidestepped by the reiteration of incanta-

tions concerning the “exquisite, juridical intimacy” (Pet.

p. 3) of old and new constitutions, unwarranted charges

of judicial oversight or neglect and similar arguments

designed to ignore the fundamental issue. It is evident

from the opinion that the court viewed the basic Federal

constitutional question, «e., the violation of the equal

protection clause, as unaffected by the emergence of the

Illinois Constitution of 1970.

a "pee

THE INTERPRETATION OF ARTICLE IX-A ADOPTy)

BY THE TRIAL COURT IN THE LAKE SHORE (Cig

IS INCONSISTENT WITH THE RULES OF STATOR,

RY INTERPRETATION, WOULD PERMANENT;

ABOLISH ALL PERSONAL PROPERTY TAXES sp

CAUSE FINANCIAL CHAOS FOR SCHOOLS, MUmic,

PALITIES AND ALL OTHER PUBLIC BODIEs 9

ILLINOIS.

In the trial court, Lake Shore Auto Parts Co. py

cured an interpretation of Article IX-A which regulty

in a judgment abolishing all personal property taxes fy

individuals and corporations in Illinois. That arguma

was rejected first by the Illinois Supreme Court a

secondly by this court in its refusal to grant certiory

to Lake Shore for a reconsideration of that argumer

(No. 71-674). Upon the refusal of this court to grant i

certiorari, Lake Shore moved that it be allowed to wit

draw from the case since its sole interest before this cour

would be the seeking of the affirmance of its trial court vk

tory. This court denied the motion to withdraw. We are iz

formed that the respondent’s brief to be submitted by Lak

Shore will reiterate the arguments upon which the tri

court decision was achieved. These amici believe that i

is quite improper for Lake Shore, supposedly entrusted

as respondent, with the mission of sustaining the Illinois

Supreme Court to raise these arguments in its brief. [

these amici were “parties” to the litigation, they wou

move that the offending portions of the Lake Shore brid

be stricken. Not being parties, we resubmit to this cour.

in substantially similar form, those arguments which ®

presented to the Illinois Supreme Court where we wer

accorded the status of parties and where we did direeth

answer the contentions of Lake Shore.

gaHIeseiastr

aed

‘= BE RB SB

th;

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_— po

The plaintiff in Lake Shore is a corporation. That case

was brought as a class action on behalf of all corporations

in the state. The plaintiff most effectively represents its

class when it succeeds in bringing about a total abolition of

rsonal property taxes for corporations. The plaintiff in

Lake Shore could not accomplish this purpose by attacking

the constitutionality of Article IX-A. If Article [X-A falls,

the prior provisions of Illinois law would continue in

foree. Under the existing Revenue Act, corporations,

business entities and individuals (however, that term be

defined) would continue to be subject to personal prop-

erty taxation (Chapter 120, Section 499, Illinois Re-

vised Statutes, 1969). If Article IX-A were to be de-

dared unconstitutional, corporations would receive some

tax relief in that they would share the tax burden with

all other taxpayers in the state. But, as has been seen,

' the optimum success for Lake Shore Auto Parts Co.

= would be not the sharing of taxation but the abolition

E of the tax for corporations and ironically for everyone

with that goal in mind.

The complaint of Lake Shore Auto Parts Co. does not

q allege the unconstitutionality of Article [X-A; instead, the

: plaintiff was scrupulously careful to limit its constitutional

attack to a prior existing statute rather than to the Con-

' stitutional Amendment. Its argument is as follows:

The Revenue Act of the State of Illmois (Chapter

120, Section 482, et seq., Illimots Revised Statutes,

1969) provided prwr to the passage of Article

IX-A for ad valorem personal property taxation

of .all real and personal property im the state

with certain exceptions. The effect of the passage

and approval of Artwle IX-A was to amend the

Revenue Act so as to repeal the personal property

I At

SIS EIS OT PPR Is

ANY CO OD veer

ER LENS Ni) LER

Ske ae. gt

PE REITER ABN,

tax for all but corporations. Once this

by tmplication was accomplished, it is the

‘property tax statute which must itself be swept away

as a violation of the 14th Amendment because of

its discrimination against corporations. The resyl of

this theory of interpretation is that the Illinois Rew.

nue Act, as it relates to personal property is, in ix

entirety, declared unconstitutional.

Since the Revenue Act is the only statutory enactment ¢

the state regarding the establishment of a personal prop.

erty tax, the result of such a judicial finding would }

an immediate abolition of ad valorem personal property

for all taxpayers in the state.

At the trial court level in the Lake Shore case, the plain.

tiff was able to achieve the amazing result of the judicial

abolition of an established and important tax by ignoring

the question of the constitutionality of Article IX-A itself

and directing the court’s attention only to the Revenne

Act. Amici submit that the Illinois Revenue Act (whic

has been constitutional for thirty years) has not suddenly

become unconstitutional.

Section 499 of the Illinois Revenue Act (Chapter 1%

Illimois Revised Statutes, 4969) has, since 1939, defined

the personal and real property of this state which is sub.

ject to taxation. Sections 500 through 500.23 of the Act

define property put to certain uses which are granted a

exemption from such taxes. It would need little argument

to show that if a particular exemption adopted by statute

were unconstitutional it would be the exemption rather

than the entire tax which would fall. An exemption, for

example, of all personal property owned by state legisls-

tors would undoubtedly fall before a constitutional attack

Such an attack, however, would leave the general personal

property tax enabling section unaffected and in full foree,

Ney

This case differs from that situation in only one respect.

The exemption is contained not in the Revenue Act but in

the Constitution. That, difference, however, can hardly

justify the effect of the Lake Shore trial court’s ruling

which was to uphold the enactment that created the invidi-

ous distinction and to strike down the enactment that did

not. Such a strange ruling could only be the result of the

trial court’s misconception that as between a valid and

constitutional statute and a constitutional amendment that

creates an invidious classification, the statute must fall to

save the amendment. Such is not the law.

In Reitman v. Mulkey, 387 U. S. 369 (1967), an amend-

ment to the California Constitution would have repealed

prior “open housing” statutes. The Supreme Court of the

United States affirmed the judgment of the California Su-

preme Court which ruled the amendment to be unconstitu-

tional and the prior statutes to remain in effect. In reach-

ing its decisions, the California Court looked to several

factors :

“A state enactment cannot be construed for purposes

of constitutional analysis without concern for its im-

mediate objective (In re Petraeus (1939) 12 Cal. 2d

579, 583, 86 P.2d 343; see Griffin v. County School

Board, 377 U.S. 218, 231, 84 S.Ct. 1226, 12 L.Ed.2d

256), and for its ultimate effect (Jackson v. Pasadena

City School Dist. (1963) 59 Cal.2d 876, 880, 31 Cal.

Rptr. 606, 382 P.2d 878; Gomillion v. Lightfoot (1960)

364 U.S. 339, 341-343, 81 S.Ct. 125, 5 L.Ed.2d 110;

Avery v. State of Georgia (1953) 345 U.S. 559, 562,

73 S.Ct. 891, 97 L.Ed. 1244; Near v. State of Minne-

sota (1931) 283 U.S. 697, 708-709, 51 S.Ct. 625, 75

L.Ed. 1357). To determine the validity of the enact-

ment in this respect it must be viewed in light of its

historical context and the conditions existing prior

to its enactment. (Select Base Materials v. Board of

srr n FF a2H2E8 A

Bare S S&st Ra ke

ce Pres &

SEAMEN AEE N RINE ET Sm ge

— 48 — -

Equalization (1959) 51 Cal.2d 640, 645, 335 P.2d 67.

Evans v. Selma Union High School Dist. (1924) 1g

Cal. 54, 57-58, 222 P. 801, 31 A.L.R. 1121; see Snoy.

den v. Hughes (1944) 321 U.S. 1, 8-9, 64 S.Ct 391,

88 L.Ed. 497.)”

[Mulkey v. Reitman, 50 Cal. Rep. 881, 884)

The Supreme Court of the United States specifically e.

dorsed this method of interpretation and announced thy.

“Judgments such as these we have frequently undertake,

ourselves.” [citing cases] (387 U. S. at 373)

The Rettman case involved racial discrimination whik

the case at bar involves economic discrimination. In th

Rettman case the Court looked to the entire state of the

law. Both the constitutional amendment and the statute

had to be construed together to test whether a constity.

tional result would be reached. When the two enactments

read together led to unconstitutionality, the enactment

most ‘responsible for that result was ruled to be void

Thus this Court rejected the argument that the constitp.

tional amendment there in question was valid while the

underlying statutes must fall. The effect of the Cali.

fornia constitutional amendment was to sanction racial

discrimination. Likewise, in the case at bar, it is the

amendment and not the (revenue) statute which affects 4

violation of the equal protection clause.

Article [X-A must be viewed together with other perti

nent. provisions of Illinois law. If, as the Lake Shore Court

ruled, Article IX-A causes the Revenue Act to be uncon.

stitutional, it will abolish all personal property taxes

in the state. Such a result would not be consistent

with the intent of the Legislature in proposing the amend-

ment nor consistent with the intent of the people in ap.

proving the amendment. Both the Legislature and the

an A

people contemplated that some class or classes would con-

) tinue to pay personal property taxes even after the ef-

fective date of Article IX-A. Whatever the Legislature

and the people had in mind, it can at least be said that

they anticipated a limited tax exemption and not a total

tax abolition. In Village of Glencoe v. Hurford, 317 Il.

903,. 148 N.E. 69, it was said:

“When the literal enforcement of a statute would

result in great injustice and lead to consequences

which the legislature could not have contemplated,

the courts are bound to presume that such conse-

quences were not intended and will adopt a construc-

tion which it may be reasonable to presume was con-

templated by the Legislature.” (at 220)

: The Illinois Supreme Court has also said:

“If a statute admits of two-eonstructions, one of which

renders the enactment reasonable and salutory while

the other renders it mischievous, if not absurd, the

latter construction should be avoided.”

[Karlson v. Murphy, 387 Ill. 436, 443]

; The Lake Shore interpretations of Article IX-A would, in

the most offhanded and unconscious of ways, entirely re-

peal an important tax utilized by almost every public

body in the state. This is due to the fact that Article

+ IX, Sec. 5(b) of the new Constitution provides: “Any

ad valorem personal property tax abolished on or before

| the effective date of their Constitution shall not be re-

instated.”

That subsection “makes room” for the limited exemp-

tion of Article IX-A by providing that any ad valorem per-

sonal property tax abolished before July 1, 1971 shall not

be reinstated. If paradoxically Article IX-A is constitu-

tional and yet (as the respondent in Lake Shore contends)

Pe See ee ee

it, in turn, renders unconstitutional all other ad valorey

personal property taxes this form of taxation may not

reinstituted. The decision of the trial court in the Iq,

Shore case would remove from the General Assembly the

power to reinstitute an ad valorem personal property ty

so long as Section 5(b) is contained in the 1970 Constit,

tion. Such a result would be both bizarre and destructiy.

The result would be bizarre in that it would be dictatay

by stilted tests of construction which would neither hono;

the constitutional intent nor adequately consider the effer

of such interpretation. The result would be destruetiy,

in that it would in an instant cause financial chaog fo

school districts, municipalities and nearly all other public

bodies in the state.

Illinois local governments and public bodies have bee

extremely limited in the sources and amounts of reveny

available to them. Most public bodies in the state levy

a property tax payable from the assessments of req]

and personal property. The percentage which this tay

bears to the total public revenues varies based upon the

availability of other income sources. In municipalities,

annexation and license fees, fines collected from ordinance

violations, utility taxes and profits from local utility

services supplement the amounts received from property

taxes. School districts and other special service public

bodies are, however, far more limited in their sources

of revenue. For them property taxes make up the pre

dominant share of their local income. In many school

districts a large percentage of revenue is attributable

to the assessment of personal property. The Lake Shor

decision would immediately and permanently wipe ont

this source of revenue.

ee) Le

The amount of assessed valuation of real and personal

property has always played an important part in the finan-

| ial planning of public bodies. The ability to issue bonds

has been directly connected with the tax base of the public

body. The amount of assessed valuation is an important

factor in the ability of governmental bodies to issue bonds

and in the rate of interest which they will be required to

pay. If the personal property tax is totally abolished public

hodies will find their tax base and borrowing powers

suddenly diminished.

If all personal property taxes are declared unconstitu-

tional as a result of this Court’s adoption of the trial

court’s position the following named amici and other

publie bodies will lose, yearly, revenues in excess of the

following stated amounts:

Proviso Township High School

NE I oiisvisinistensnninrvinvoniateaceoeacavendeneed $ -1,752,231

Cicero Grade School

MII ai cpiitscniawecossneezssrccnopcoverinsccssnnepii $ 1,203,169

County Of COOK .....ssesssseeseessereeses i cidiliadaatell $19,837,514

Metropolitan Sanitary District ...........00 $ 7,746,448

City Of CHICAGO .....rscresscsesssrsssesssssecssesssessessseers $11,625,517

Chicago Board of Education... $70,102,183

Chicago Park District .........ccssssseseseerereeees $13,662,772

| Substantial reduction in the tax base of all public bodies

- in the State would occur and the statewide loss in yearly

- revenues for school districts, municipalities, counties and

| other public bodies would exceed $250,000,000.00. |

| These amici and the class they represent are unlike

: private corporations which can expand and contract their

| production based upon the availability of capital. A school

| district must teach all the children enrolled; a sanitary

district must treat all the sewage it receives; and, a city

S cannot provide police services only three days a week.

The new Constitution was drafted with this in mind and

sf PF Rk SSIs PF SR eA SB

}

—

therefore provides in Article IX Section 5(c) for the pm

placement of all personal property taxes abolisha

We ask the court to take judicial notice of the difficulti«

faced by public bodies in recent years in providing 4

full and effective range of services upon revenues yp.

diminished by personal property tax exemptions.

CONOLUSION

In a well litigated and vigorously contested lawsuit th

Illinois Supreme Court found that the Constitution of th

United States would not be bent so as to make: corpon.

tions the only payers of the Illinois ad valorem person

property tax. The Court, perhaps realizing that corpors.

tions can hardly defend themselves at the polls against ip.

vidious discrimination, rejected the attempts of legislators

to bestow such a singular burden upon them. The Illinois

Supreme Court relied upon established precedents of this

Honorable Court in reaching its politically unpopular but

legally correct and just result. This Court should affirm

the decision of the Illinois Supreme Court which held, in

effect, that the equal protection clause of the 14th Amend.

ment does not shift with prevailing political winds.

Respectfully submitted,

AnceL, Guivx, D1amonp Witwer, Moran & Burau

& Murpxy SaMugEL W. Wirwer

Louis ANCEL 141 W. Jackson Boulevard

Stewart H. Diamonp Chicago, Illinois 60604

111 W. Washington Street 427-8750

Chicago, Illinois 60602

782-8606

Attorneys for Amici Curtae

haa BF a SBBaeaetneta 2-42.32 6b Bs os a >

AE tee mere

COPY BOUND ¢

TABLE OF CONTENTS

PAGE

NSTITUTIONAL PROVISIONS AND STAT-

UTES —----— 1

STIONS PRESENTED FOR REVIEW ................ D)

TATEMENT OF THE CASE 5

UMMARY OF THE ARGUMENT 9

GUMENT:

A Classification Which Distinguishes As Between

Corporations And Natural Persons For The Pur-

pose Of Imposing An Ad Valorem Property Tax

Is Violative Of The Equal Protection Clause Of .

_The Fourteenth Amendment 11

. Preliminary Statement 11

. The Position Urged By The State of Illinois

Would Produce Serious and Undesirable Con-

sequences 14

. Long Established Interpretations of the Four-

teenth Amendment Prohibit a Property Tax

Which Discriminates Against Corporate Own-

ership 16

. The Traditional Distinction As Between Prop-

erty Taxes and Nonproperty Taxes Reflects

a Genuine and Important Difference ................ 28

. There Is No Rational Basis for the Discrim-

inatory Classification in the Case at Bar ..... 41

—

D CLOSE IN CENTER

Il.

THE INVALIDATION OF ARTICLE I[X-A of

THE ILLINOIS CONSTITUTION BY THE ILI.

NOIS SUPREME COURT WAS ERRONEOUS

AND IN ITSELF VIOLATIVE OF THE FOoOuR.

TEENTH AMENDMENT

A. Preliminary Statement

B. Article [IX-A Does Not Offend the Equal Pro.

tection Clause

C. Enforcement of Rights Protected By the

Equal Protection Clause Will Be Seriously

Impaired If the Holding of the Illinois Sp.

preme Court With Respect to the Invalidity

of Article [X-A Is Allowed to Stand

III.

THE CLASS ACTION FINDING IN SHAPIRO

v. BARRETT IS VOID FOR WANT OF DUE

PROCESS OF LAW AND THE ADVERSE

JUDGMENT THEREIN HAS NO RES JUDI-

CATA EFFECT WITH RESPECT TO LAKE

SHORE AUTO PARTS CO. OR ANY OTHER

ILLINOIS CORPORATION EXCEPT M. WEIL

& SONS, INC.

CONCLUSION

APPENDIX A ................... la-3a

Toe rweerernes

vine we Te eens cee

—~

COPY BOUND C

iii

AvutTHoritTies CITED

Cases

Aberdeen Savings & Loan Ass’n. v. Chase, 289 Pac. 536

(Wash., 1930), op. on reh. sub nom. Washington Mu-

tual Savings Bank v. Chase, 290 Pac. 697 (1930) ...... 26

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

(1959) - 27, 28, 40, 41

, American Federation of Labor v. Watson, 327 U.S. 582

Bh (1946) 4

Ambar Associates v. West Side Redevelopment Corp.,

97 S.W. 2d 635 (Mo., 1965) 39

Associated Hospital Service, Inc. v. City of Milwaukee,

1H 9 N.W. 2d 271 (Wise., 1971) 39

Bel’s Gap R. Co. v. Pennsylvania, 134 U.S. 232

(1890) ... o 11, 37

Bromley v. McCaughn, 280 U.S. 124 (1929) -.W0 2... 24

Brown-Forman Co. v. Kentucky, 217 U.S. 563 (1910) .. 11

(armichael v. Southern Coal & Coke Co., 301 U.S. 495

(1937) 37

(harleston Federal Savings & Loan Ass’n. v. Alder-

son, 324 U.S. 182 (1945) ...... 37

(oncordia Fire Ins. Co. v. Illinois, 292 U.S. 535

ees , 25, 26, 33

Dombrowski v. Pfister, 380 U.S. 479 (1965) -.000020.... 57

Educational Films Corp. of America v. Ward, 282 U.S.

379 (1931) ......

J CLOSE IN CENTER

‘tiie Wl dM Aaah it,

Eisen v. Carlisle & Jacquelin, 391 F. 2d 555 (2d Cir, By

1968) inde.

Elston-Damen Currency Exchange, Inc. v. Sheon, 4 [|

Ill. App. 2d 218 (1964) ites e

Ex parte Young, 209 U.S. 123 (1908) .. ¥

Flint v. Stone Tracy Co., 220 U.S. 107 (1911) ... 13, 32

Fort Smith Lumber Co. v. Arkansas, 251 U.S. 539

(1920) —

Frost v. Corporation Comm’n., 278 U.S. 515 (1929) 3

Frost & Frost Trucking Co. v. Railroad Comm’n. of

California, 271 U.S. 583 (1926) ...... 51, 38

Gamble-Robinson Fruit Co. v. Thoreson, 204 N.W. 81

CRD ig. TBTB) riewicticsiccccocnenievmnnnivsiiinchenenstncesminiaoneniniiiants 9

Garysburg Mfg. Co. v. Pender County, 42 F. 2d 50

(E.D.N.C., 1930), rev’d. on other grnds. 50 F. 2d 732

OE Re TUBE iriceiesininen 2%, %

Great Atlantic & Pacific Tea Co. v. Grosjean, 301 US.

Le sn .

Guinn v. United States, 238 U.S. 347 (1915) 20. if

Hanover Ins. Co. v. Harding, 272 U.S. 494 (1926) ... 13,3

Hansberry v. Lee, 311 U.S. 32 (1940) .. |

Harman v. Forssenius, 380 U.S. 528 (1965) .................. 5

Home Ins. Co. v. New York, 134 U.S. 594 (1890) ... 13,3

Hylton v. United States, 3 Dall. 171 (1796) -............

Knowlton v. Moore, 178 U.S. 41 (1900) 2022.2-2-2-.-cecsssssssen

Lawrence v. State Tax Comm’n., 286 U.S. 276 (1932)

}

)

COPY BOUND CL

ovisville Gas & Electric Co. v. Coleman, 277 U.S. 32

(1927) wnvvreeenseneeennccnnnnnnenensnnnenennnnenetnenerttnneeennaneeetnneees 24

inch v. Household Finance Corp., ...... UB. ..--5 92

Se TD CID) sacri cretcaee 14

nim Magoun V. Illinois Trust & Savings Bank, 170 U.S. 283

33, 34

3 McHenry Vv. Alford, 168 US. 651 (1895) aoe eeneeeeeeenncee 22, 36

\enphis Natural Gas Co. v. Beeler, 315 U.S. 649

ores iin: ae

Yorey v. Doud, 354 U.S. 457 (1957) -....- 12, 36, 55

id Yount Hope Cemetery Co. v. Pleasant, 32 Pac. 2d 500

joccecieeacestesiacbagdeseeiiaieecutiatetenetsianecsmieeteanepons 26

Yullane v. Central Hanover Bank & Trust Co., 339

BE Fe CLE masters nen iescserdesecinensortinrsnitininenstdttinienimeventin 65

\ew York Rapid Transit Co. v. City of New York, 303

Oe COE sescciiecsnscosaneteninevesonsnnesiearteneenninadbacenisneannicie 37

Northern Pacific Ry. Co. v. Sanders County, 214 Pac.

ie 86 (Mont, 1923) -........--..necrovcecvercnsecnsecnscresesensssnssenesonssotes 21

Northwestern Improvement Co. v. State, 220 N.W. 436

soe asfesacte pocasincney voi esetsploueconnteneranieaesepattieneneses 22

(klahoma Operating Co. v. Love, 252 U.S. 331 (1920) .. 58

Pacifie Co. Ltd. v. Johnson, 285 U.S. 480 (1932) ........ 35

Puifie Ins. Co. v. Soule, 7 Wall. 433 (1869) 0000000. 32

Paul v. Virginia, 8 Wall. 168 (1869) .... 12

CLOSE IN CENTER

}

;

{

;

Dri eetse

PANE IE gt SENG SIT

8 SAPO GOREN MA BNE Sd OO)! Aa

care 7

Pembia Consol. Silver Mining Co. v. Pennsylvania, 195

U.S. 181 (1888) a

Pollock v. Farmers’ Loan & Trust Co., 157 U.S. 4% F

(1895), op. on reh. 158 U.S. 601 (1895) on”

Public Building Comm’n. v. Continental Illinois Na [PR

tional Bank & Trust Co., 30 Ill. 2d 115 (1963) %

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

(1928) ....--.c-ceccereecereecersesersnesssnsnssnssnnnsesnessensanensnsnsaes 23, 2,2 (

Rast v. VanDeman & Lewis Co., 240 U.S. 342 (1916) _.

Red Cross Line v. Atlantic Fruit Co., 264 U.S. 109

(1924) -.n.nccscecnensceceensceeerecerssossosesensnsesscnssncecncensessoesaueesesesnn A

Redfield v. Fisher, 292 Pac. 813 (Ore., 1930), reh. den, Rts

sub nom. Redfield v. Norblad, 295 Pac. 461 (1931), [BP

cort. dem, 206 U.S..G17 (IGGL) .nccnccncceccneseccensocseseinsiitiiis 5

Reserve Life Ins. Co. v. Bowers, 380 U.S. 258 (1965) . #4

Reynolds v. Sims, 377 TE, GOB CIDE) svceeccisecineecic ee

H. Rouw Co. v. Texas Citrus Comm’n., 247 8.W. 2d 231

(Texas, 1953) ......-c-cccccscccsesepenssnsseesesnssnsssnesnesnessnssessenesen s)

F. S. Royster Guano Co. v. Virginia, 253 U.S. 412

(1920) cncccccscerecesosneresorosevenceserasenrsseressssnsnonennsenvnesescenssccwenene i

Russell v. Croy, 63 S.W. 849 (Mo., 1901) ....-.------cesenm 4

San Bernardino County v. Southern Pacific R. Co,

118 U.S. 417 (18BB) ...-.-000-.0-c.cc-cccccrsesesereeconsssncosencoseace 17,2

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

722 (1882), app. dism. 116 U.S. 138 (1885) ............ 17,4

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

385 (1883), aff’d. 118 U.S. 394 (1886) ................. 11,%

———-—~—

COPY BOUND CLC

vii

ley v. Rew, 23 Wall. 331 (1875) 39

japiro v. Thompson, 394 U.S. 618 (1969) 0... 57

Bpelley v. Kraemer, 334 U.S. 1 (1948) .........2:c:coscccssesseees 56

BBitton v. Tucker, 364 U.S. 479 (1960) 57

Bbuith v. People, 361 U.S. 147 (1959) eneeeeeeeeenneeen 57

vathern Railway Co. v. Greene, 216 U.S. 400

= i el ED a ERED OOO 12, 27

ate v. Hunt, 9 N.E. 2d 676 (Ohio, 1937) ..................-.. 26

te Board of Tax Comm’rs v. Jackson, 283 U.S. 527

Sse sam ob eabeetlcallnceoapeasanaiveeleinsbebslacideduiaisidcciinasoniesiabaie 35

te ex rel. Northern Pacific Ry. Co. v. Duncan, 219

RD Cig CRE) sctiptncrrennscnicieaniciacnsionenninsceninnsaiiiness 21

te Tax Comm’n. of Utah v. VanCott, 306 U.S. 511

Tis ic clianoichachsbiche cca dagendutdielidanblaiignieuubiesieasiinisibaiteeeomanetiane 55

horpe v. Mahin, 43 Il]. 2d 36 (1969) 0.0... ccceccoeeens 13, 33

mer v, Texas, 310 U.S. 141 (1940) ..........-c0ecrecssrersereseeee 37

ne, Inc. v. Hill, 385 U.S. 374 (1967) ............ccececsceceeee 57

ton v. A.T. & S.F. Ry. Co., 298 U.S. 141 (1936) ...... 55

x v. Corrigan, 257 U.S. 312 (1921) .....202..........0000. 53

landingham v. Ryan, 17 Ill. 25 (1855) ........2.202...... 64

wie Bank v. Fenno, 8 Wall. 533 (1869) .................... 32

age of Lombard v. Ill. Bell Telephone Co., 405 Il.

PINE stieticiacicetininiarenelecsonnaimnice 30

ulker v. Northern Pacific Ry. Co., 47 Fed. 681

(CCN.D., 1891) 21

;LOSE IN CENTER

;

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