52 N.E.2d 177 | Ill. | 1943
Appellee, Owens-Illinois Glass Company, a corporation, filed its complaint for injunction in the circuit court of LaSalle county against George B. McKibbin, as Director of Finance, and the Department of Finance of the State of Illinois, to enjoin him from levying or imposing, collecting, or attempting to collect the retailers' occupation tax from plaintiff for sales of beer bottles, and also to enjoin the levying, imposing, collecting, or attempting to collect such tax from plaintiff upon sales of glass beer bottles to breweries in Illinois, when the latter, upon the *247 sale to customers of beer in such bottles, charge a deposit upon the bottles separate from the contents. A temporary injunction was granted by the court. A motion was made to vacate the temporary injunction and to dismiss the complaint. The motion was denied and appellant elected to abide by his motion to dissolve the injunction and dismiss the complaint, whereupon a decree proconfesso was entered and a permanent injunction decreed by the court. The revenue is involved, and therefore the appeal comes directly to this court.
The complaint alleges plaintiff is an Ohio corporation licensed to do business in this State and engaged in the manufacture of glass bottles for sale to businesses and corporations operating breweries in Illinois; that a large portion of such bottles is purchased through contracts made in the State of Ohio, and others are manufactured by plaintiff in Illinois, and sold for resale to breweries located within the State of Illinois. The complaint then recites the several provisions of the Retailers' Occupation Tax Act, including the power of the Director of Finance to make and promulgate rules and regulations, and sets forth at length paragraph 2 of rule 51, as follows:
"Sellers of containers to purchasers who are engaged in the business of selling tangible personal property contained in such containers to other persons are deemed to make sales of such containers for resale if the purchasers of such containers are engaged in the business of selling tangible personal property contained in such containers and transfer the ownership of the containers to their customers together with the ownership of the tangible personal property contained therein."
The complaint further alleges that June 1, 1942, the Director issued a ruling by letter directed to the plaintiff, advising that: "Where deposits are charged for beer bottles transferred to customers, title to such bottles is retained by the person first making such charge, and the *248 Owens-Illinois Glass Company, when it sells beer bottles to breweries which transfer such bottles to customers taking deposits therefor, is engaged in making retail sales of such bottles and incurs Retailers' Occupation Tax liability with respect to its gross receipts from such sales;" that the Director has demanded the plaintiff produce its books for examination, so the Department may assess a tax against the plaintiff on account of sales of bottles to breweries in Illinois, which charge deposits on bottles transferred to customers, and that if plaintiff fails to make such returns and pay such tax the defendant will impose the penalties provided by the statute; and that such ruling of the Department is void both under the provisions of the Retailers' Occupation Tax Act and the rules and regulations now in force.
The complaint then sets forth in detail the means of doing business, and shows in substance that all beer bottles are sold to breweries to be filled with beer and resold; that used beer bottles are a general object of commerce; that certain breweries differentiate between the price of the beer sold and the price of the bottles containing it, and take deposits for bottles, agreeing to refund same when the bottles are returned empty to the brewery; that when customers purchase beer at retail, leaving a deposit for bottles, no record is kept of the bottles sold, or the name of the customer, and that the latter may dispose of them in any way, or he may return them to the seller or any other seller, and receive a sum equal to the required deposit, and that when a brewery purchases new beer bottles from the plaintiff and fills and delivers them to the trade, it parts with possession and control over such bottles, and they become objects of commerce to be freely bartered and sold on the market; that the sale of bottles by the plaintiff to such breweries and disposal of them filled with beer is not a sale for use and consumption, but falls directly within the provisions of Rule 51, and *249 imposes no liability upon the plaintiff to pay the retailers' occupation tax.
A supplement to the complaint was filed in which it was alleged that the defendant threatened to immediately instruct his agents to notify plaintiff of its failure to pay the tax required by the statute, and be subject to the penalties provided therein. The complaint and supplemental complaint show that complainant has over four hundred customers in Illinois, and that all of its books and accounts are kept in Toledo, Ohio; and recites in detail the inconveniences and hardships attendant upon compliance with the statute, when it is not liable for the payment of the tax.
The motion of appellant to the complaint and supplemental complaint sets out three grounds: (1) that the plaintiff has a full and adequate remedy at law for the determination of its tax liability under the provisions of the Retailers' Occupation Tax Act, and that such remedy should be pursued by the plaintiff; (2) that the plaintiff has a full and complete statutory remedy under the provisions of the statute relating to the payment of money to public officers under protest, (Ill. Rev. Stat. 1941, chap. 127, par. 172;) and (3) that the complaint and supplemental complaint are substantially insufficient in that they fail to allege facts sufficient to warrant a court of equity to take jurisdiction.
It is stated in the briefs, and was urged upon oral argument, that the sole point raised in this appeal is the jurisdiction of a court of equity to enjoin the collection of the retailers' occupation tax. Before discussing the points raised by appellant going to the jurisdiction of the court to issue an injunction we will first give attention to the proposition urged in appellant's brief that the complaint and supplemental complaint fail to allege facts showing the plaintiff will suffer irreparable injury, and therefore fails to state a cause of action in equity. Appellant *250 relies upon the well-settled rule that if there is a total failure to state a cause of action in a complaint its insufficiency can be raised at any time; and then contends the allegations contained in the present complaint and supplemental complaint bring the case within that rule.
There is a substantial and material difference between alleging a good cause of action in a defective manner and in stating no cause of action. (Sargent Co. v. Baublis,
The facts set forth in the complaint and supplemental complaint, considered in the light of the admissions made by the motion to dismiss, constitute the substance of a good cause of action, provided, of course, equity may enjoin an unauthorized tax. The objections under this point go to the particularity with which the facts in the complaint are alleged, especially the claim that the allegations constitute conclusions of law. We think there can be no question but what the complaint adequately shows facts which, if true, would exempt plaintiff from complying with the Retailers' Occupation Tax Act, since the allegations respecting the location of its office, the manner in which it does business, the practice with respect to the collection of deposits on bottles, and all similar statements are all allegations of fact. The mere circumstance the plaintiff charges that by reason thereof, as a legal conclusion it is not liable to pay the tax, does not invalidate the matters well pleaded. *251
We are of the view that if appellant was of the opinion the cause of action was defectively stated the point should have been raised in the trial court. The Civil Practice Act provides all defects in pleading, either in form or substance, not objected to in the trial court, shall be deemed waived. (Ill. Rev. Stat. 1941, chap. 110, par. 166, sec. 42, subsec. 3.) It also provides that all objections to pleadings heretofore raised by demurrer shall be raised by motion, which shall point out specifically the defects complained of. (Sec. 45, subsec. 1.) And it likewise provides that where a pleading is objected to by motion to dismiss because it is substantially insufficient in law the motion must specify wherein such pleading is insufficient. (Sec. 45, sub-sec. 2.) The Civil Practice Act applies to proceedings both at law and in equity, and is a remedial statute to be liberally construed.
While we do not go to the extent of holding that a pleading which wholly fails to state any cause of action may not be taken advantage of for the first time on appeal, we do think in this case that if the complaint was insufficient it was not in the substance of the matters charged, but only with respect to the particularity with which the facts are set out, and therefore clearly comes within the provisions of the Civil Practice Act, which to this extent modified what may have been a rule previous to its adoption. We think the complaint and supplemental complaint are sufficient as against this objection.
The contentions of appellant made in its motion to dismiss are: (a) equity will never exercise its powers in aid of one who has a full, complete and sufficient remedy at law, and that plaintiff has three separate and distinct statutory remedies, any one of which would be full and adequate; (b) that equity will not enjoin the collection or assessment of a tax on the sole ground that the taxing statute is unconstitutional, or that the particular imposition is not authorized by statute. And as a complement to *252 these grounds defendant urges that since the power to tax is an attribute of sovereignty its exercise should be unhampered, and that equity is reluctant to interfere where the legislature has provided the taxpayers with methods of determination of tax liability.
In answer to these propositions appellee contends: (1) that equity does have jurisdiction to enjoin the assessment or collection of a tax imposed without authority of law, notwithstanding the taxpayer might also possess legal remedies whereby the collection of such tax could be defeated; and (2) that the remedies provided by the Retailers' Occupation Tax Act, and the provisions of the act authorizing the recovery of taxes paid under protest, do not afford an adequate relief against an illegal tax sought to be imposed. The legal issue thus presented is reduced to a narrow compass, and the position of both parties is supported by exhaustive briefs ably presenting their respective contentions.
It cannot be denied that as a general rule courts of equity will not take jurisdiction to grant relief if redress for a wrong may be obtained in a proceeding at law. This is the general rule to which, under the Illinois decisions, relief from the collection of unauthorized taxes is claimed to be an exception. The rule as to enjoining the collection of unauthorized taxes is not uniform among the several States, and possibly a majority of jurisdictions hold contrary to Illinois. However, it is clear that from an early date the courts of this State have regarded the enjoining of the collection of an illegal tax, or the assessment of an authorized tax upon property which is not subject to taxation, as exceptions to the rule that equity will not take jurisdiction of a cause where there is an adequate remedy at law.
Probably the earliest clear exposition of the principle is to be found in Chicago, Burlington and Quincy Railroad *253 Co. v. Frary,
What perhaps may be regarded as the leading case in Illinois upon the subject is Searing v. Heavysides,
In the case of Moline Water Power Co. v. Cox,
Without attempting to analyze all of our decisions adhering to this principle it is sufficient to say that it has been applied in one form or another in the following cases: Drake v. Phillips,
Appellant, however, points out that the Retailers' Occupation Tax Act makes provision for a hearing in case the tax is improperly applied, and has provisions for appeal *255 to the court, and that the taxpayer may obtain a refund in case of payment, where it is determined the occupation was not subject to tax. He also calls attention to the provisions of the act permitting taxes to be paid under protest, with the right to return in case it is held it is not properly collected. The presence of such provisions in the law does not prevent enjoining an illegal or unauthorized tax.
In Illinois Central Railroad Co. v. Hodges,
The principles announced in the foregoing cases must not be confused with cases in which an injunction has been refused because of irregularities in the imposition of the tax, where the authority for such tax existed. *256 Vieley v. Thompson,
From the foregoing resumé the enjoining of the collection of illegal taxes constitutes an exception to the general rule that equity will not take jurisdiction of a cause when there is an adequate remedy at law. It is established that where a tax is unauthorized by law, or where it is levied upon property exempt from taxation, equity will take jurisdiction and enjoin the collection of the tax. This constitutes an independent ground of equitable relief, and in such cases it is not necessary that special circumstances exist to authorize issuing an injunction. It is also the rule in such cases that where remedies are provided by statute they are cumulative, and are exclusive only where they have been first invoked by the taxpayer. And it is to be noted this exception to the general rule applies only to the illegal and unauthorized imposition of a tax, and not to irregularities in levying a lawful tax.
There is no doubt expressions in conflict with this general rule are to be found in some cases, but as we said in Chicago,Burlington and Quincy Railroad Co. v. Frary,
In Porter v. Rockford, Rock Island and St. Louis Railroad Co.
Ayers v. Widmayer,
188 Ill. 121 , Correll v. Smith,221 Ill. 149 , and Peirce v. Carlock,224 Ill. 608 , are all cases in which an injunction was sought to enjoin a tax because of irregularities, and it was said in connection with such facts that special circumstances must be set out to justify the interposition of equity. The rule that an injunction will not be issued to enjoin a tax for mere irregularities is also stated inHerschbach v. Kaskaskia Island Sanitary and Levee District,265 Ill. 388 , and Beardsworth v. Whiteside and Rock Island DrainageDistrict,356 Ill. 158 , but in both cases the injunction against the collection of the taxes was sustained because of their illegality, and the remedy at law held to be inadequate.
However, while expressions have been used in some cases that special circumstances showing irreparable injury must be alleged, or that an injunction will not lie where there is an adequate remedy at law, so far as we are able to discover they were all used in situations where an irregular, as distinguished from an illegal, tax was involved. We find the principle firmly established that equity has jurisdiction to enjoin the collection of an unauthorized tax, although there exists a concurrent remedy at law. *258
Appellant makes the further suggestion that in all of the cases relied upon by appellee the tax had been levied upon real estate or personal property, which rendered it subject to sale or distraint, and therefore to prevent a loss of the property the collection was enjoined; that such a situation does not exist here, because as yet there has been no assessment and no process taken to collect money from the taxpayer, and therefore, although appellee may be correct so far as enjoining the collection of taxes against real and personal property, such cases have no application to the present situation. Appellant places reliance upon the case of Acme Printing Ink Co. v. Nudelman,
It must be kept in mind that the tax involved is upon the occupation. It is not levied by a municipal body each year. It is a tax to which every retail dealer is subject, and the statute is self-executing in determining from whom taxes are due. When the Director of Finance holds a person or business is in an occupation subject to the tax, when in fact such person or business is not in the occupation of retail sales for use or consumption, he has required such persons to pay monthly the occupation tax, and on default to have the assessment made together with penalties. *259 Thus, the action of the Department brings one within the operation of the statute and subject to the illegal exaction of taxes. The same may be said of the requirement of plaintiff to pay taxes on retail sales made in interstate commerce, which was expressly excluded by the statute.
We can see no substantial distinction between the Director of Finance taking a course of action which determines an occupation is taxable, when it is not in fact taxable, and of levying an unauthorized tax. In either event unless the action is restrained the taxpayer is required to pay unauthorized taxes. The same is true with respect to the acts of appellant requiring appellee to pay on sales contrary to rule 51. Thus, in People's Gas Light andCoke Co. v. Stuckart,
The actions of appellant compelled appellee to either make a return and produce its records, or bring its suit in equity to enjoin the action of the Director as amounting to a determination that its occupation was taxable. Since the remedies were cumulative plaintiff had a right to bring its complaint for injunction rather than to rely upon the procedure provided by the statute.
In several recent cases the question whether a plaintiff was engaged in an occupation that rendered him subject to the retailers' occupation tax has been determined by bringing an injunction against the Director of Finance. (Peoples Gas Lightand Coke Co. v. Ames,
The allegations contained in the complaint and admitted to be true by appellant's motion disclose a plaintiff who is not subject to the Retailers' Occupation Tax Act and the intention of the Director of Finance to make sales taxable which are declared not taxable under the rules of the Department. So long as such rules are in force they have the effect of law. We are of the opinion the complaint states a case where one not liable for the payment of the tax is made liable by the action of the Director, who is charged with the administration, enforcement and collection of such tax, and whose action, if not restrained, will result in requiring the plaintiff to pay unauthorized taxes and penalties thereon.
The complaint stated a cause of action, and the plaintiff properly resorted to equity under a long-established practice granting relief in cases of such character. We are satisfied the circuit court of LaSalle county had jurisdiction to entertain an equitable suit for injunction in this case, and that the facts alleged in the complaint justified its issuance.
The decree of the circuit court of LaSalle county is affirmed.
Decree affirmed.