Opinion ID: 2226504
Heading Depth: 1
Heading Rank: 4

Heading: the judgment tax fund objection

Text: Objection No. 15 challenges the validity of the entire 1948 levy of $642,170.09 for the Judgment Tax Fund. The ground of this objection is that funds in excess of the amount of the levy were available for transfer to the Judgment Tax Fund and that the necessity for any levy whatsoever on account of that fund was therefore eliminated. The taxpayer's contention is based upon certain entries in the comptroller's report for 1947. That report contains a Special Assessment Fund Comparative General Balance Sheet which shows as assets Cash with Treasurer in the sum of $3,472,202.39. As liabilities it shows Vouchers audited and warrants outstanding $94,027.47, and Available balance to sundry accounts, $3,378,174.92. It is upon this latter item that the dispute between the parties centers. The 1947 report of the comptroller does not identify the sundry accounts which are involved. But by reference to the report of the comptroller for the year 1946, the objector identifies the following items: (1) Liability of sundry warrants to Judgment Tax Fund, $188,635.83 and (2) Liability of sundry warrants to account for paying Chicago judgments, $487,753.55; and by an analysis of expenditures during the year 1947, he establishes that these liabilities shown in the 1946 report remained unsatisfied during 1947. He therefore contends that the total of these two items, amounting to $676,389.38, was available for transfer to the Judgment Tax Fund as of January 1, 1948, and that the availability of this sum renders unnecessary, and so illegal, the entire levy on account of the Judgment Tax Fund. The substance of the collector's contention with respect to this item is that the objector's analysis does not accurately picture the existing situation; that several million dollars of special assessment bonds issued by the city of Chicago in the past are still outstanding and that these bonds represent a claim upon any available special assessment funds which is prior to the claim of the Judgment Tax Fund for reimbursement. To establish these facts, which apparently are not set forth in the comptroller's report for 1947, the collector refers to reports of the comptroller for earlier years which show outstanding special assessment liabilities. For example, liabilities on account of outstanding special assessment bonds and vouchers in the year 1944 were in excess of $19,000,000; in the years 1943 and 1942, in excess of $20,000,000, and in the year 1941 in excess of $21,000,000. These earlier reports also identify the particular special assessment warrants against which the claims of the Judgment Tax Fund and the fund for the payment of Chicago judgments exist. The special assessment fund balance sheet, upon which this objection is based, must be read with an understanding of the law which governs a municipality in the handling of money which it holds as the proceeds of the collection of a special assessment. Numerous decisions of this court and of the Appellate Courts have established the status of such funds and the duties imposed upon municipalities which hold them. As stated in Chicago Flower Growers, Inc. v. City of Chicago, 306 Ill. App. 571, 576, The rules of law generally applicable have been stated in Rothschild v. Village of Calumet Park, 350 Ill. 330, 340; also in People ex rel. Anderson v. Village of Bradley, 367 Ill. 301, and in many other cases following these decisions. Under the provisions of the Local Improvement Act the city is trustee to collect the assessments for the benefit of the holders of the particular instalments of bonds, and the rules of law as to trusts are applicable. Distribution should be made equally and pro rata to holders of the bonds of a particular instalment issued against a particular warrant. In How & Co. v. City of Chicago, 316 Ill. App. 153, (affirmed, 384 Ill. 232,) a judgment had been entered against the city because of its failure to prorate collections on account of a special assessment warrant among the holders of bonds of that warrant. Payment of the judgment was, of course, pro tanto payment of the bonds involved, and when additional funds were collected on account of the warrant against which the bond was issued, the city sought to use these funds to reimburse itself. Its claim was denied. Special assessment funds, said the court, must be applied to the balance remaining due on the outstanding bonds until they are paid in full before the city can be reimbursed. It follows that money which comes into the possession of the city as the proceeds of the collection of a special assessment is held by the city as trustee, and must be used to satisfy outstanding special assessment bonds and vouchers before it can be used to reimburse other funds of the city for advances made to satisfy judgments or for any other purpose. It is settled that the burden of proof to establish the facts which will sustain an objection to a tax levy rests upon the objector. ( People ex rel. Bergan v. New York Central Railroad Co. 392 Ill. 525; People ex rel. Toman v. Hines Lumber Co. 385 Ill. 366; People ex rel. Gill v. Diversey Hotel Corp. 364 Ill. 298.) The record which is before us indicates that the liabilities to the Judgment Tax Fund and to the fund for the payment of Chicago judgments which are referred to in the report of the comptroller are the liabilities of particular special assessment warrants. There is no showing that funds remain in any of those special assessment warrants over and above the amounts needed to satisfy outstanding bonds and vouchers. In the absence of such a showing, special assessment moneys continue to be held in trust by the city for the benefit of the bondholders, and they may not be diverted to the reimbursement of other funds until the primary obligation is satisfied. The present case is distinguishable from People ex rel. Nelson v. Beu, 403 Ill. 232, where an objection like the one here involved was sustained, because the record before the court in that case failed to show by appropriate evidence the existence of outstanding liabilities on account of special assessment bonds and vouchers which had a prior claim to the funds in question. Those liabilities are shown in this record. The objection with respect to the levy for the Judgment Tax Fund should have been overruled.