APPEAL from the County Court of Cook County; the Hon. EDMUND
K. JARECKI, Judge, presiding.
MR. JUSTICE SCHAEFER DELIVERED THE OPINION OF THE COURT:
Rehearing denied January 20, 1953.
This is an appeal from a judgment of the county court of Cook County sustaining an objection to the 1948 taxes levied by the Board of Education of the city of Chicago and entering judgment in favor of the objector for the amount by which his taxes paid under protest were found to be excessive. Original objections to the application for judgment and order of sale against the property in question were filed on November 19, 1949, but these objections were not disposed of until September 14, 1951, when the court entered its final judgment after hearing evidence on an amended objection which had been filed on August 23, 1951.
The question raised is one of first impression. The theory of the amended objection is that the 1948 levy of the Board of Education was excessive because in the board's budget for that year appropriable assets of the educational, playground, free textbook and teachers' pension funds were understated in the aggregate amount of $1,249,526.88, making the levy excessive to that extent. The assets which are alleged to have been available for appropriation but omitted from the budget are said to have arisen through the board's failure to confine losses in revenue, occasioned by refunds to taxpayers of the invalid portions of the 1940, 1941, and 1942 taxes, to the particular funds in which the illegal items were contained. The board distributed all collections received from its levies for the years 1940, 1941, and 1942, among its several funds in the proportion which the levy for each fund bore to the total levy. Prior to January 1, 1948, the collector had made refunds to objecting taxpayers on account of the illegal portions of the levies for the years 1940, 1941, and 1942. The board did not revise its records to charge the amounts refunded because of illegality to the particular fund in which the illegal levy occurred. The objector contends that the failure of the board to charge the losses to the specific funds which contained the illegal items, and its practice of distributing the revenues to the various funds ratably, resulted in overdistributions to the building fund and the bond and interest fund and corresponding underdistributions to the educational, free textbook, school playground and teachers' pension funds; that this improper distribution created interfund debts which should have been reflected as credits in the four last-mentioned funds and as assets available for appropriation in the 1948 budget and levy. The interfund debts and credits or items of over-distribution and underdistribution claimed to have existed on January 1, 1948, are:
Creditor Amount of Debtor Amount of Funds Under-distribution Funds Over-distribution
Educational $1,193,708.13 Building $ 385,100.05 Playground 2,730.40 Bond and Interest 864,426.83 Free Textbook 11,673.32 Teachers' Pension 41,415.03 _____________ _____________ $1,249,526.88 $1,249,526.88
The objector asserts that the failure to treat these credits as assets available for appropriation from the creditor funds makes the 1948 levy for each of the creditor funds excessive in the amount shown.
There is no controversy as to the facts. The history of the tax levies for the years 1940, 1941, and 1942 is as follows: The Board of Education adopted its 1940 budget (also called its appropriation ordinance) on January 10, 1940, and the city council of Chicago adopted the board's tax levy ordinance totaling $65,662,726.03 the following day. On or before January 23, 1940, tax anticipation warrants in the amount of $44,745,000 were sold to finance the operation of the schools for the year, and all budgeted expenditures for 1940 were made during that year or lapsed by operation of law. The 1940 taxes went into collection and became payable on June 1 and September 1, 1941. Final payment on all tax warrants issued against the 1940 levy was made on December 28, 1941. Some taxpayers paid under protest and filed objections contesting the validity of certain items. These objections, totaling $6,101,126 were filed by November 15, 1941. They were disposed of by final judgment on March 20, 1945. Objections to the following items and amounts were sustained:
Building $ 35,000.00 Item appropriated in Education Fund Bonds improper fund (2nd Series) 381,644.00 Invalid bond issue Refunding Bonds of 1935 (1st Series) 212,525.00 1/11 Invalid bond issue Refunding Bonds of 1935 (2nd Series) 296,069.00 Invalid bond issue ___________ $925,238.00
By January 1, 1948, $457,450.89 of the total amount held illegal had been refunded by the county collector to taxpayers. These refunds were paid by the collector from the aggregate of school taxes (regardless of the year involved) which were in his hands at the time the refunds were made. As the school taxes for 1940 were collected, they were turned over by the county collector to the school authorities in lump sums, and upon their receipt were distributed among the various funds in the proportion which the total levy for each fund bore to the total levy for all purposes. The amounts ultimately refunded on account of illegal 1940 items were not charged back to the specific fund in which the illegality occurred but all funds shared ratably in the proceeds of the levy regardless of refunds to taxpayers on account of illegalities in certain funds. By January 1, 1948, the Board of Education had collected $54,140,477.54 of the 1940 levy. The board's levy for 1940 was still in collection on January 1, 1948.
Apart from differences in amounts, dates and funds involved, the facts with respect to the 1941 and 1942 levies are the same. The 1941 budget was adopted on January 22, 1941, and the levy in the amount of $68,903,138.70 was passed on February 5, 1941. On February 14, 1941, tax warrants totaling $45,524,000 were sold. All budgeted items for 1941 were spent during 1941 or lapsed by operation of law. Taxes extended on the levy became payable on May 1 and September 1, 1942. Tax warrants issued against the 1941 levy were retired before the end of 1942. Upon application of the collector for judgment and order of sale for delinquent taxes on November 2, 1942, objections in the amount of $12,608,487 were filed on or before November 14, 1942. These objections were disposed of by final judgment entered on January 18, 1946. They were sustained as to the following items and amounts and otherwise overruled:
Educational $ 5,000 Improper Itemization Building 783,000 Items appropriated in improper fund Playground 10,000 Item appropriated in improper fund Free textbook 18,000 Item appropriated in improper fund Refunding bonds of 1935 (1st Series) 232,978 1/11 Invalid bond issue ...