44 N.E.2d 606 | Ill. | 1942
Lead Opinion
The defendant, the Granada Apartment Hotel Corporation, having previously paid its taxes in full, under protest, filed an amended objection in the county court of Cook county to an application of the county collector for a judgment against and an order for the sale of real estate for the non-payment of certain taxes for the year 1939 levied by the board of education of the city of Chicago. From the judgment overruling its objection, defendant appeals.
The county clerk extended a rate of $3.19 for taxes levied by the board of education. This rate included a levy of .040802, representing items in the budget of the board *42 of education to be paid from its bond and interest fund. The budget, adopted March 22, 1939, sets forth for each fund, the sums appropriated for the necessary expenses for the year 1939, and the sums required to defray all liabilities as they existed on January 1, 1939. From the budget setting forth as of January 1, 1939, all current assets ascertained to be "available for appropriation" and all current liabilities as of January 1, 1939, to be appropriated for, it appears that the requirements of the bond and interest fund were:
Bond redemptions ........ $ 1,260,000.00 Interest on bonds ....... 1,500,720.00 Current liabilities ..... 11,413,914.67 --------------- Total requirements of the fiscal year at the beginning of 1939 ............. $14,174,634.67
These appropriations were to be satisfied from the following resources:
Current assets at the beginning of the fiscal year 1939 available for appropriation .................... $11,413,914.67 To be raised by taxation (exclusive of loss and cost) 2,760,720.00 -------------- Total resources ...................... $14,174,634.67
From the amended objection it appears that the total appropriated needs for the fiscal year 1939 for the bond and interest fund were, as follows:
For unpaid liabilities of prior years .. $11,413,914.67 For all other expenditures and charges to be made or incurred during 1939 ... 3,066,666.00 -------------- Total appropriations ................. $14,480,580.67
These requirements, it is charged, were to be satisfied as follows:
*43Resources available for 1939 appropriations ....................... $11,413,914.67 Income from miscellaneous sources ...... None The levy of a tax for 1939 (including loss and cost) 3,066,666.00 -------------- Total resources available for 1939 appropriations $14,480,580.67
The objection alleges that the tax levy for 1939 is excessive for the reason that the "unpaid liabilities of prior years" appropriated for in 1939, in the amount of $11,413,914.67, included purported liabilities aggregating $833,744.92, which are not a legal obligation or charge against the board of education for the reason that they represent accrued principal and interest on (1) educational fund bonds of 1931, second series, (2) one-eleventh or 9.1 per cent of the refunding bonds of 1935, first series, and (3) refunding bonds of 1935, second series, which were issued to fund tax anticipation warrants and, hence, are illegal and void. In particular, the appropriations for 1939 represented accrued liabilities for principal and interest on (1) bonds issued to liquidate tax anticipation warrants and (2) bonds refunding the principal due on other bonds originally issued to liquidate tax anticipation warrants, as follows:
Accrued Liability
Principal Interest Total
Educational fund bonds, second series ........... $438,000.00 $ 83,665.92 $521,665.92
Refunding bonds of 1935, first series, 1/11th of $522,500 or ...................... 95,454.00 47,500.00 142,954.00
Refunding bonds of 1935, second series ........... 105,000.00 64,125.00 169,125.00 ---------- --------- ---------- $638,454.00 $195,290.92 $833,744.92 The educational-fund bonds, second series, were issued conformably to an act approved June 28, 1930, (Laws of 1930, Sp. Sess. p. 93.) This statute assumed to authorize the board of education of the city of Chicago to issue bonds for the purpose of paying tax anticipation warrants issued in anticipation of the collection of taxes for the years 1928 and 1929 for educational purposes. One eleventh of the refunding bonds of 1935, first series, was issued pursuant to the authority of an act approved February 28, 1934, (Laws of 1933-1934, 3rd Sp. Sess. p. 246,) purporting to authorize the board of education to issue non-referendum *44 bonds for the purpose of refunding "outstanding bonds which are binding and subsisting legal obligations." These bonds were issued to refund revolving-fund bonds of 1930 and 1931, and educational-fund bonds, second series, the latter, as recounted, having been issued to refund tax anticipation warrants. All the refunding bonds of 1935, second series, were issued pursuant to the same statute, namely, the act of February 28, 1934, for the purpose of refunding educational-fund bonds which had, in turn, been issued to refund tax anticipation warrants. By a stipulation of the parties it is conceded that for the purpose of this cause the educational-fund bonds of 1931, second series, one eleventh or 9.1 per cent of the refunding bonds of 1935, first series, and the refunding bonds of 1935, second series, were issued to fund tax anticipation warrants and may be considered illegal.
On the basis of the foregoing facts, the defendant contends that the appropriations for the requirements of the illegal or void bonds are invalid and cannot afford the basis for the levy of a valid tax. It affirmatively appears from the budget of the board of education that its estimated resources including estimated current assets available for appropriations in the amount of $11,413,914.67, together with estimated current revenue of $3,066,666, including loss and cost, exceed the amount appropriated for valid requirements to the extent of $833,744.92 as claimed by the defendant. In short, a legal appropriation is lacking for taxes levied amounting to $833,744.92. Since the bonds described are, for the purposes of this cause, admittedly void, it follows, necessarily, that the appropriations to satisfy principal and interest on them are likewise void. (People ex rel.Morse v. Orvis,
People v. Schiek, supra, closely parallels the case at bar. There, the appropriations of the city of Chicago for 1934 included an illegal item of $1,300,000, representing interest on tax warrants issued against tax levies of 1934 and prior years. The total legal appropriations in the corporate-purpose fund amounted to $47,073,901.62. Total resources, after deducting an excessive tax amounting to $1,411,484.64, based on a legal tax levy, aggregated $47,073,901.62. The levy in the Schiek case was excessive to the extent of $1,411,484.64, for the reason the total estimated resources exceeded the total legal appropriations to the extent named. As we observed: "No greater tax than the actual need may be legally levied." Similarly, in the present case the tax levy exceeded the actual need by $833,744.92.
The collector complains, however, that the defendant has failed to prove the amount of the surplus, if any, in the bond and interest funds of the board of education. *46
The collector's position is, in effect, that when the levy produces an amount in excess of the legal appropriations the levy is not excessive but merely creates a surplus and that this surplus does not render the levy illegal. It is true, as the collector insists, that People ex rel. Toman v. Mercil SonsPlating Co.
Nor is the solvency or insolvency of "taxes receivable — net" pertinent to the sole issue made here. The board of education, in the exercise of a legitimate discretion, decided the net taxes receivable were solvent. There is no basis for setting aside its judgment in this regard. The collector places particular reliance upon People v. Mercil Sons Plating Co. supra; People ex rel.Toman v. Born Co.
The judgment of the county court is reversed and the cause is remanded, with directions to sustain defendant's amended objection and to order a refund of the excess amount of taxes paid by defendant.
Reversed and remanded, with directions.
Concurrence Opinion
I concur in the foregoing opinion but believe the reasons for holding the levy was $833,744.92 excessive should be more fully explained. This sum represented the total of educational funding bonds and refunding bonds with interest, which were void under our holdings in Berman v. Board of Education,
We held in the Mercil case, supra, that the uncollected taxes of prior years and other liabilities shall be estimated, as well as assets from uncollected and current taxes and other sources, and that the county authorities were not required at their peril to decide whether they could avoid payment of a liability. We pointed out, however, that in the Schiek case the city attempted to carry into the levy something designated as a liability which could never in any sense be a liability, not only because of the statute but because of the prohibition contained in section 9 of article IX of the constitution. I can see no distinction between holding it improper to include in a schedule of liabilities an item which violates the constitution and one that has been held by this court to be absolutely void. I feel that the item above mentioned has no place in the list of *48 liabilities because we have previously determined such bonds were invalid and hence never could be a liability of the Board of Education.
Such is the purport of the opinion as written, but I think it is proper to point out specifically the reason why such supposed liabilities were improperly set out in the appropriation ordinance.
Mr. CHIEF JUSTICE STONE joins in this special concurrence.