Court Opinion

ID: 9730104
Source: CourtListenerOpinion
Date Created: 2023-08-26 15:01:18.874757+00
Date Added: 2024-06-11T18:26:04.158062
License: Public Domain

MR. JUSTICE UNDERWOOD, dissenting: Although the court acknowledged in Getto I the “complementary and interlocking nature” (Getto v. City of Chicago (1979), 77 Ill. 2d 346, 355) of the municipal message tax and the plaintiff’s offsetting payments to Bell pursuant to section 36(a) of the Public Utilities Act (Ill. Rev. Stat. 1977, ch. 111 2/3, par. 36(a)), the majority is here led to what seems to me the incongruous result of requiring Bell to pay over to the trustee money which was paid to it without objection between July 18, 1967, and July 18, 1977, despite the fact that this money was remitted to the city in the form of message tax at the time it was originally collected. This result is accomplished by ignoring Adams v. Jewel Companies (1976), 63 Ill. 2d 336, Hagerty v. General Motors Corp. (1974), 59 Ill. 2d 52, and the cases there cited. Those cases indicate that, in the case of similarly related use tax and retailers’ occupation tax, one who voluntarily pays excessive tax to a retailer who, in turn, remits the corresponding tax to the taxing body, cannot, in the absence of statute, later recover the excessive tax. While paying lip service, the majority today effectively abandons the voluntary-payment doctrine stated in Illinois Glass Co. v. Chicago Telephone Co. (1908), 234 Ill. 535, 541: “It has been a universally recognized rule that money voluntarily paid under a claim of right to the payment and with knowledge of the facts by the person making the payment cannot be recovered back on the ground that the claim was illegal. It has been deemed necessary not only to show that the claim asserted was unlawful, but also that the payment was not voluntary; that there was some necessity which amounted to compulsion, and payment was made under the influence of such complusion.” (Ross v. City of Geneva (1978), 71 Ill. 2d 27; Adams v. Jewel Companies (1976), 63 Ill. 2d 336; Hagerty v. General Motors Corp. (1974), 59 Ill. 2d 52; Illinois Glass Co. v. Chicago Telephone Co. (1908), 234 Ill. 535.) First, failure to protest payments voluntarily made during the 10-year period is excused on the ground of lack of knowledge that the amounts had been erroneously computed even though no inquiry had been made and the contents of public records would have disclosed the method of computing the overcharge. Even Ross v. City of Geneva (1978), 71 Ill. 2d 27, on which the majority relies, is distinguishable, since there the surcharge complained of was protested as soon as it was shown on the bill as a miscellaneous charge. In the present case payments were made without protest during the 10-year period, despite the fact that the charge was shown on customer bills under the heading “City,” with a footnote explaining that it was an additional charge due to city taxes. Second, and more importantly, the majority relies on the possibility that the plaintiff labored under an unrealistic fear of termination of service as sufficient to show that the payments were made under compulsion. The fact is, however, that such termination would have been directly contradictory to the orders of the Illinois Commerce Commission prohibiting termination where liability is disputed. Again, Ross is distinguishable, for there the defendant had an established policy of terminating the service of those who refused to pay the challenged surcharge. Fears which the majority imputes to the plaintiff are made no more reasonable by the fact that the commission staff was involved in devising the incorrect method of computing the charge, especially since there is no evidence that plaintiff was ever aware of that involvement. (Getto v. City of Chicago (1979), 77 Ill. 2d 346, 360-63) (Underwood, J., dissenting).) If unreasonable beliefs can provide sufficient compulsion to excuse otherwise voluntary payments, the voluntary-payment doctrine no longer exists. The doctrine of laches (Pyle v. Ferrell (1958), 12 Ill. 2d 547) would provide a second reason to deny the plaintiff relief concerning amounts collected during the period from July 18, 1967, to July 18, 1977. The ordinance imposing the message tax was enacted in 1955, as were provisions corresponding to section 36(a) of the Public Utilities Act. Although any recovery will apparently be limited to the 10-year period preceding filing of the complaint in this case, the erroneous computations of taxes and collection fees had been performed each month for 22 years before plaintiff filed this class action, and the collected taxes were presumably paid to the city by Bell during each of those years. If retroactive recovery is permitted there will be obvious and substantial financial prejudice to the city and the utility, which long ago expended the funds resulting from the now challenged computations. Having ignored the doctrine of laches, and having decided that the voluntary-payment doctrine did not preclude recovery of sums paid prior to July 18, 1977, the majority approves the circuit court’s order that Bell deposit with the trustee amounts collected during that period, less whatever amounts had been deposited by the city. Similar action by the appellate court in Hagerty was condemned by this court: “We do not approve the appellate court’s statement that: ‘If defendant collected excess taxes from its customers, it has received and has retained the excess money to which it is not entitled. The fact that defendant may have paid a similar amount of money to the State is of no importance when considering the rights and obligations between defendant and its customers. Any money defendant may have paid to the State was in discharge of its own obligations and does not affect the rights of plaintiff and the class. When defendant retained the tax collected from plaintiff, it was unjustly enriched to the extent to which the tax collected exceeded the amount of tax that it could rightfully collect.’ 14 Ill. App. 3d at 43. This reasoning misapprehends the interrelation between the use tax and the retailers’ occupation tax. (See Turner v. Wright (1957), 11 Ill. 2d 161.) If GM erroneously paid a retailers’ occupation tax to the State on the same transaction in which it erroneously collected a use tax from the plaintiff, it was not enriched at all, justly or unjustly. If there was unjust enrichment, it was the State that was enriched.” Hagerty v. General Motors Corp. (1974), 59 Ill. 2d 52, 60. To date, as the majority acknowledges, “No determination whatever has been made as to Hability for overcharges.” (86 Ill. 2d at 55.) Bell has admittedly paid to the city all of the collected taxes, retaining only the collection charge provided by section 36 to compensate it for its services in collecting the tax. Under the majority’s approach to this case, Bell can rationally be required to pay to the trustee of the fund that portion of its collection charge which had been improperly computed. There is, however, in my judgment, no defensible basis upon which BeH may also be required to pay the trustee the improperly computed amounts of tax which it had already paid to the city during the intervening 10 years. If those funds are to be paid into the fund at all, payment should be required from the city to which it was paid. The ordinance required Bell to pay the collected taxes to the city. It did so for 22 years. Now, it is for the first time claimed that the tax was incorrectly computed, and that both the amount of the city’s tax and the amount of Bell’s collection fee are higher than authorized. Requiring Bell to pay into the protest fund the disputed portion of its retained fees is one thing, but compelling it, instead of the city to which the taxes have been paid, to pay into the fund the amounts of tax previously remitted to the city during the 10-year interval, is, it seems to me, totally unjustified. That action may well pose substantial due process problems in addition to being directly contrary to Adams, Hagerty, and the cases there cited. Whether the utility’s future customers or the city’s taxpayers, or both, bear the burden of the 10-year refund which appears to be contemplated by the trial court and a majority of my colleagues depends, of course, on whether the majority will permit Bell to eventually recover its duplicate payment from the city, a question the majority refuses to decide now. This anomalous situation typifies the problems resulting when retroactive recovery is permitted of taxes paid without protest for an entire decade. I would limit recovery here to post-complaint-filing payments of the overcharges. MR. JUSTICE RYAN joins in this dissent.