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Peoples Gas Co. v. City of Chicago

OPINION FILED SEPTEMBER 25, 1956.

THE PEOPLES GAS LIGHT AND COKE COMPANY ET AL., APPELLANTS,

v.

THE CITY OF CHICAGO ET AL., APPELLEES.



APPEAL from the Circuit Court of Cook County; the Hon. CHARLES S. DOUGHERTY, Judge, presiding.

MR. JUSTICE HERSHEY DELIVERED THE OPINION OF THE COURT:

The Peoples Gas Light and Coke Company sued in the circuit court of Cook County to restrain the enforcement of a Chicago ordinance imposing a tax upon persons engaged in the business of selling gas for use or consumption within the city at the rate of 5 per cent of gross receipts. Upon motion of the city for summary judgment, the court dismissed the complaint. A constitutional question being involved, this court has jurisdiction on direct appeal.

In June of 1955, the General Assembly enacted Senate Bill 750 which amended the Revised Cities and Villages Act and purported to give cities the following additional tax powers:

"To tax any or all of the following occupations or privileges:

"1. Persons engaged in the business of transmitting messages by means of electricity, at a rate not to exceed 5% of the gross receipts from such business originating within the corporate limits of the municipality.

"2. Persons engaged in the business of distributing, supplying, furnishing, or selling gas for use or consumption within the corporate limits of the municipality, and not for resale, at a rate not to exceed 5% of the gross receipts therefrom.

"3. Persons engaged in the business of distributing, supplying, furnishing, or selling electricity for use or consumption within the corporate limits of the municipality, and not for resale, at a rate not to exceed 5% of the gross receipts therefrom.

"4. Persons engaged in the business of distributing, supplying, furnishing or selling water for use or consumption within the corporate limits of the municipality, and not for resale, at a rate not to exceed 5% of the gross receipts therefrom." Ill. Rev. Stat. 1955, chap. 24, par. 23-113, p. 590.

At the same session, the Public Utilities Act was amended to allow these taxes to be passed on to the consumer. Ill. Rev. Stat. 1955, chap. 111 2/3, par. 36.

Acting pursuant to this statute, on December 1, 1955, the Chicago city council passed three ordinances. The first, called the "Gas Ordinance," taxed persons engaged in the business of selling and distributing gas in Chicago (including Peoples Gas Light and Coke Company, the only public utility selling gas in Chicago) at the rate of 5 per cent of gross receipts. The second, called the "Electricity Ordinance," taxed persons engaged in the business of selling and distributing electricity (including Commonwealth Edison Company, the only public utility selling electricity in Chicago) at the rate of 5 per cent of gross receipts. The third, called the "Messages Ordinance," taxed persons engaged in the business of transmitting messages by means of electricity (i.e., Illinois Bell Telephone Company and Western Union Telegraph Company) at the rate of 2 per cent of gross receipts.

However, in the "Electricity Ordinance" a credit, equal to street use payments, is allowed against the tax. Since under its franchise ordinance Commonwealth Edison pays 4 per cent of its gross receipts for use of streets, this taxing ordinance actually exacts only an added 1 per cent — or taken together, the stated 5 per cent. (Commonwealth Edison's franchise ordinance contemplates and provides for a credit of this type.) Likewise, Illinois Bell pays the city 3 per cent of its gross receipts for use of streets under a franchise agreement, so that the additional 2 per cent exacted by the "Messages Ordinance" results in payments equal to 5 per cent. But Peoples Gas, under a perpetual charter granted by the General Assembly in 1855 and consented to by the city of Chicago in 1858, is not required to pay for use of city streets.

Peoples Gas was joined by three of its customers in its attack on the validity of the "Gas Ordinance." The cause was heard on complaint and motion for summary judgment, with affidavits filed by both sides. The court held with the city, granting its motion for summary judgment.

In asking us to reverse the circuit court, Peoples Gas makes three contentions: (1) The tax is not uniform as to class, in violation of section 1 of article IX of the Illinois constitution. (2) The tax results in the unconstitutional impairment of a contract subsisting between it and the city. (3) The statute upon which the ordinance is based was not passed in accordance with the procedures required by article IV of the Illinois constitution.

The principal issue in the case involves the validity of the tax as against the contention that it is not uniform as to class. (Ill. Const., art. IX, sec. 1.) To determine this question, we must ascertain the following: (1) Did the General Assembly authorize the city of Chicago to impose this particular tax? (2) If so, does the ...


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