Opinion ID: 2211695
Heading Depth: 2
Heading Rank: 1

Heading: Unconstitutional on Its Face?

Text: As stated, the trial court declared the Act unconstitutional on its face on the ground that it imposed a form of criminal punishment. Because the validity of a legislative act is involved, we begin our analysis with the presumption that all statutes are constitutional. ( Continental Illinois National Bank & Trust Co. v. Illinois State Toll Highway Comm'n (1969), 42 Ill.2d 385, 389, 251 N.E.2d 253.) The party challenging the statute in question bears the burden of clearly establishing that the statute is unconstitutional. ( Bernier v. Burris (1986), 113 Ill.2d 219, 227, 100 Ill. Dec. 585, 497 N.E.2d 763.) Any doubts will be resolved in favor of the validity of the law challenged. Continental Illinois National Bank & Trust Co. v. Illinois State Toll Highway Comm'n (1969), 42 Ill.2d 385, 389, 251 N.E.2d 253. With these principles in mind, we first consider the trial court's conclusion that the Act is facially invalid because it imposes a criminal penalty rather than a tax. Specifically, we must determine whether the Act, though civil in form, is actually a form of criminal punishment. A statute which imposes criminal punishment without affording an accused the procedural safeguards which accompany a criminal trial or the rights guaranteed by the fifth and sixth amendments of the Federal Constitution violates due process. See Kennedy v. Mendoza-Martinez (1963), 372 U.S. 144, 164, 83 S.Ct. 554, 565, 9 L.Ed.2d 644, 658. Whether the Act imposes a criminal sanction is a matter of statutory construction. Helvering v. Mitchell (1938), 303 U.S. 391, 58 S.Ct. 630, 82 L.Ed. 917; see also United States v. Halper (1989), 490 U.S. 435, 447, 109 S.Ct. 1892, 1901, 104 L.Ed.2d 487, 501 (recourse to statutory language, structure, and intent is appropriate in identifying the inherent nature of a proceeding, or in determining the constitutional safeguards that must accompany those proceedings). The United States Supreme Court has established a two-part test for determining when a statute, though nominally civil, actually imposes a criminal sanction. ( United States v. Ward (1980), 448 U.S. 242, 248-49, 100 S.Ct. 2636, 2641, 65 L.Ed.2d 742, 749; see United States v. One Assortment of 89 Firearms (1984), 465 U.S. 354, 104 S.Ct. 1099, 79 L.Ed.2d 361; Rex Trailer Co. v. United States (1956), 350 U.S. 148, 76 S.Ct. 219, 100 L.Ed. 149; Helvering v. Mitchell (1938), 303 U.S. 391, 58 S.Ct. 630, 82 L.Ed. 917.) First, the court must determine whether the legislature expressly or impliedly indicated a preference for a civil or a criminal label. ( Ward, 448 U.S. at 248, 100 S.Ct. at 2641, 65 L.Ed.2d at 749.) The fact that the legislature has indicated that it intended to establish a civil penalty, however, does not end the inquiry. The court must continue its analysis and determine whether, despite this expressed intent, the statutory scheme is so punitive either in purpose or effect as to negate that intention. ( Ward, 448 U.S. at 249, 100 S.Ct. at 2641, 65 L.Ed.2d at 749.) If so, then even a nominally civil proceeding will be treated as criminal in nature. With regard to the second inquiry, the Court has noted that `only the clearest proof' will suffice to establish a punitive purpose or effect for a nominally civil statute. Ward, 448 U.S. at 249, 100 S.Ct. at 2641, 65 L.Ed.2d at 749, quoting Flemming v. Nestor (1960), 363 U.S. 603, 617, 80 S.Ct. 1367, 1376, 4 L.Ed.2d 1435, 1448. Applying this test here, we conclude that the monetary penalty imposed by the Act is civil and does not trigger the constitutional protections afforded to a criminal defendant. With respect to the first prong, we find that the legislature clearly indicated a preference for a civil label. The statute itself is labeled a tax and the legislature provided a distinctly civil procedure for collection of both the tax and the addition to that tax. See Ill.Rev.Stat.1989, ch. 120, pars. 2160, 2166; see also United States v. Sanchez (1950), 340 U.S. 42, 45, 71 S.Ct. 108, 110, 95 L.Ed. 47, 50 ([t]he fact Congress provided civil procedure for collection indicates its intention that the tax be treated as such). Applying the second prong of the Ward test, we hold that the plaintiff has not provided the clearest proof that the purpose or effect of the statutory scheme is so punitive as to negate the civil label. In analyzing this second Ward inquiry, we find it appropriate to consider a number of factors, commonly referred to as the Mendoza-Martinez factors. (See Kennedy v. Mendoza-Martinez (1963), 372 U.S. 144, 168-69, 83 S.Ct. 554, 567-68, 9 L.Ed.2d 644, 661.) These factors include: [w]hether the sanction involves an affirmative disability or restraint, whether it has historically been regarded as a punishment, whether it comes into play only on a finding of scienter, whether its operation will promote the traditional aims of punishmentretribution and deterence, whether the behavior to which it applies is already a crime, whether an alternative purpose to which it may rationally be connected is assignable for it, and whether it appears excessive in relation to the alternative purpose assigned   . Kennedy v. Mendoza-Martinez (1963), 372 U.S. 144, 168-69, 83 S.Ct. 554, 567-68, 9 L.Ed.2d 644, 661. Analysis of these factors supports a civil designation for the Act. Collection of a tax does not result in the imposition of an affirmative disability or restraint upon the plaintiff. ( Cf. Kennedy v. Mendoza-Martinez (1963), 372 U.S. 144, 168-69, 83 S.Ct. 554, 567-68, 9 L.Ed.2d 644, 661 (statute which divested persons who fled the country to avoid the draft of their citizenship involved an affirmative disability or restraint).) On the contrary, monetary assessments, such as those imposed under the Act, are traditionally regarded as a form of civil relief. (See United States v. Ward (1980), 448 U.S. 242, 256, 100 S.Ct. 2636, 2644, 65 L.Ed.2d 742, 754 (Blackmun, J., concurring, joined by Marshall, J.).) Furthermore, while criminal statutes generally come into play only upon a finding of scienter, liability under the Act is absolute and does not depend upon a finding of criminal intent. See Kennedy v. Mendoza-Martinez (1963), 372 U.S. 144, 168-69, 83 S.Ct. 554, 567-68, 9 L.Ed.2d 644, 661 (a sanction that comes into play only on a finding of scienter might be indicative of a criminal proceeding). It is true that the behavior to which the tax applies is already a crime and that the tax imposed by the Act tends to punish or deter those who possess or sell illegal drugs. Indeed, the legislative history of the Act, including the comments of several legislators, reveals that the legislature intended the tax to diminish the economic rewards associated with drug trafficking. The fact that the Act has a deterrent purpose and effect does not, by itself, transform what was clearly intended as a civil statute into a criminal penalty. Every tax discourages or deters the activity taxed to some degree. Indeed, the application of ordinary tort law has a deterrent effect. The United States Supreme Court recognized this fact long ago in Sonzinsky v. United States (1937), 300 U.S. 506, 57 S.Ct. 554, 81 L.Ed. 772, when it stated: Every tax is in some measure regulatory. To some extent it interposes an economic impediment to the activity taxed as compared with others not taxed. But a tax is not any the less a tax because it has a regulatory effect [citations] and it has long been established that [a legislative act] which on its face purports to be an exercise of the taxing power is not any the less so because the tax is burdensome or tends to restrict or suppress the thing taxed. Sonzinsky, 300 U.S. at 513, 57 S.Ct. at 555-56, 81 L.Ed. at 775. The Supreme Court later reaffirmed these principles in a decision which considered the validity of an occupational tax imposed on persons engaged in the business of accepting wagers. ( United States v. Kahriger (1953), 345 U.S. 22, 73 S.Ct. 510, 97 L.Ed. 754.) The Kahriger court upheld the tax, stating: [A] federal excise tax does not cease to be valid merely because it discourages or deters the activities taxed. Nor is the tax invalid because the revenue obtained is negligible.    It is axiomatic that the power    to tax is extensive and sometimes falls with crushing effect on businesses deemed unessential or inimical to the public welfare, or where, as in dealings with narcotics, the collection of the tax also is difficult. As is well known, the constitutional restraints on taxing are few. United States v. Kahriger (1953), 345 U.S. 22, 28, 73 S.Ct. 510, 513, 97 L.Ed. 754, 760-61. The material question here is not whether the Act has a deterrent effect. Instead, the relevant questions are whether the Act serves some alternate purpose as well, and whether the tax imposed is excessive in relation to that alternative purpose. (See Kennedy v. Mendoza-Martinez (1963), 372 U.S. 144, 168-69, 83 S.Ct. 554, 567-68, 9 L.Ed.2d 644, 661.) It is quite evident that the the Act serves a purpose other than deterring transfers of illegal drugs. The legislature also intended the Act to provide revenue to compensate the State for costs incurred as a consequence of illegal drug manufacture and use. The aim of compensating the State for its efforts to prevent or mitigate the harms caused by the sale and use of illegal drugs is a remedial goal. The tax imposed upon the transfer of illegal drugs under the Act, while substantial, is not excessive in relation to the remedial purpose of the statute. The legislature may have rationally believed that drug dealers as a group impose immeasurable costs upon the State, but do not bear their fair share of the tax burden. The tax imposed is rationally related to the legislature's desire to require those who profit from illegal drug use to reimburse the State for the costs of remedying the societalills that stem from drug use. Those costs include not only increased law enforcement expense resulting from drug-related violence, but also the severe collateral consequences of drug traffic, such as drug addiction, lost productivity, greater health costs and more demands on public assistance. The tax also provides an additional source of revenue to help offset the costs of drug education and to provide reparation to victims of drug-related crime. The tax imposed bears a reasonable relation to the purpose of compensating the State for the costs attributable to transfers of illegal drugs. The Act is not so punitive, either in purpose or effect, as to negate the legislature's manifest intent to establish a civil, remedial mechanism. The plaintiff argues, however, that the sanction imposed under the Act for nonpayment of the tax (four times the unpaid tax) is so severe that it transforms the tax into a criminal penalty. We disagree. The United States Supreme Court rejected a similar argument in Helvering v. Mitchell (1938), 303 U.S. 391, 58 S.Ct. 630, 82 L.Ed. 917. In that case, a taxpayer was indicted and prosecuted for willful evasion of taxes, but was acquitted at trial. The Commissioner of Internal Revenue then brought an action to collect the delinquent taxes ($728,709.84), plus a 50% fraud penalty. The taxpayer argued that the 50% civil penalty was intended as punishment and the tax assessment proceeding was actually a second criminal proceeding based on a single course of conduct. The Supreme Court disagreed. Applying the same two-part test described above, the Court had little difficulty concluding that Congress intended the statute to impose a civil penalty. The Court determined that the 50% sanction was in fact remedial, intended primarily as a safeguard for the protection of the revenue and to reimburse the Government for the heavy expense of investigation and the loss resulting from the taxpayer's fraud. ( Mitchell, 303 U.S. at 401, 58 S.Ct. at 634, 82 L.Ed. at 923.) The Court noted: Forfeiture of goods or their value and the payment of fixed or variable sums of money are other sanctions which have been recognized as enforceable by civil proceedings   . [Citation.] In spite of their comparative severity, such sanctions have been upheld against the contention that they are essentially criminal and subject to the procedural rules governing criminal prosecutions. (Emphasis added.) Mitchell, 303 U.S. at 400, 58 S.Ct. at 633, 82 L.Ed. at 922. See also United States ex rel. Marcus v. Hess (1943), 317 U.S. 537, 551-52, 63 S.Ct. 379, 388, 87 L.Ed. 443, 453 (Civil Fraud Act does not impose a criminal sanction because the chief purpose of the statute was to provide for restitution to the government of money taken from it by fraud, and    the device of double damages plus a specific sum was chosen to make sure that the government would be made completely whole). We recognize that the penalty imposed under the Act is more severe than the penalty imposed under the tax statute at issue in Mitchell. The legislature may have rationally believed, however, that a more severe penalty was warranted because collection of a tax on controlled substances would be more difficult than collection of other types of taxes. The Act is different from an ordinary tax statute because the activity taxedthat is, the transfer of controlled substancesis itself illegal. The legislature may have rationally believed that persons engaged in such criminal conduct would be particularly reluctant to pay the tax voluntarily. Imposition of a substantial penalty therefore encourages dealers to pay the tax before transferring drugs so as to avoid the penalty imposed for nonpayment of the tax. The legislature may have also believed that the costs of uncovering transfers of unstamped drugs and prosecuting the tax evaders would be substantial. The penalty provision provides a source of revenue to reimburse the State for costs incurred in attempting to discover violations of the Act, to prosecute the violators, and to avert or mitigate the consequent harms. Viewed in the abstract, the penalty imposed bears a reasonable relation to the purpose of compensating the State for its expenses. Indeed, in circumstances where the amount of drugs transferred is small, a penalty of four times the tax might not be sufficient to completely reimburse the State for the expense of investigating, uncovering and prosecuting those who transferred the drugs without paying the tax. It cannot be said that the measure of recovery fixed by the legislature is so unreasonable or excessive that it transforms what was clearly intended as a civil remedy into a criminal penalty. Since the Act was designed to raise revenue rather than to vindicate public justice, it is civil in nature. Our conclusion is supported by the United States Supreme Court's decision in United States v. Sanchez (1950), 340 U.S. 42, 71 S.Ct. 108, 95 L.Ed. 47. In Sanchez, the Supreme Court upheld the Marijuana Tax Act (now repealed) against a challenge that it imposed a penalty and not a tax. That statute imposed a small occupational tax upon persons who imported, manufactured, sold or dispensed marijuana. The statute also imposed a second tax upon the actual transfer of marijuana. A transfer tax of $1 per ounce was imposed on persons who had paid the occupational tax and registered. A more substantial transfer tax of $100 per ounce was imposed on persons who had not paid the occupational tax and registered. In Sanchez, as in the present case, persons who possessed illegal drugs without paying the tax challenged the statute on the ground that it imposed a criminal penalty, rather than a tax. The Court in Sanchez held that the statute was a legitimate exercise of the taxing power notwithstanding its collateral regulatory purpose and effect. ( Sanchez, 340 U.S. at 45, 71 S.Ct. at 110, 95 L.Ed. at 50.) The Court found that, despite its close resemblance to a penalty, the statute had several proper purposes, including raising revenue and controlling the traffic of marijuana. The Court also held that the more severe tax imposed upon unregistered transfers of marijuana, as opposed to registered transfers, was reasonable. The Court stated that the more substantial tax imposed upon unregistered transfers ( 100 times larger than the tax imposed upon registered transfers) was rationally related to Congress' intent to secure payment of the tax by transferees and to stop transfers to unregistered persons. ( Sanchez, 340 U.S. at 46, 71 S.Ct. at 110-11, 95 L.Ed. at 50.) The Court also noted that the more substantial tax provided an additional source from which the expense of unearthing clandestine transfers can be recovered. ( Sanchez, 340 U.S. at 45-46, 71 S.Ct. at 110-11, 95 L.Ed, at 50.) We likewise conclude that the sanction imposed under the Act for nonpayment of the tax (only four times the tax) is not so severe that it transforms the tax into a criminal penalty. Accordingly, we hold that the substantial tax and penalty imposed upon dealers under the Act is civil in nature, and that the Act is not unconstitutional on its face for failing to provide such dealers with the constitutional safeguards which ordinarily accompany a criminal trial. See State v. Berberich (1991), 248 Kan. 854, 811 P.2d 1192; Harris v. State, Department of Revenue (Fla.App.1990), 563 So.2d 97.