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Time Inc. v. Hulman

OPINION FILED SEPTEMBER 29, 1964.

TIME INCORPORATED, APPELLANT,

v.

HARRY L. HULMAN, DIRECTOR OF REVENUE, ET AL., APPELLEES. — (ADVERTISING PUBLICATIONS, INC., ET AL., APPELLANTS,

v.

SAME APPELLEES.)



APPEALS from the Circuit Court of Cook County; the Hon. JOHN F. BOLTON, Judge, presiding.

MR. JUSTICE HERSHEY DELIVERED THE OPINION OF THE COURT:

These cases are two separate direct appeals from judgments of the circuit court of Cook County, consolidated on the motion of this court. The issues involved in each case concern the public revenue and constitutional questions.

The action brought by Time, Incorporated, publisher of magazines known as Time, Life, Sports Illustrated, Fortune, Architectural Forum, and House and Home sought to enjoin defendants, the Director of Revenue and the Attorney General, from imposing upon and collecting from plaintiff any State and municipal retailers occupation taxes measured by the gross receipts from the sales in Illinois of its magazines and from imposing and collecting any use tax and service use tax measured by the purchase price of the paper used in printing the magazines. Motions for summary judgment and for judgment on the pleadings were filed by plaintiff and defendants. The trial court sustained defendants' motion, denied plaintiff's motion, and entered a decree dismissing the cause for want of equity.

The action brought by the 27 plaintiffs in No. 38582, the Advertising Publications case, sought a declaratory judgment that as publishers of their respective periodicals they were not engaged in a business subject to the retailers' occupation tax and that the material transferred in these periodicals was not tangible personal property under that tax act. The trial court overruled a motion to dismiss the complaint, but on hearing found for defendants and entered judgment for defendants.

The present Retailers' Occupation Tax Act became effective July 1, 1933. Its title recited that the act levies "a tax upon persons engaged in the business of selling tangible personal property." The Department of Revenue adopted Rules 2 and 63 which stated that receipts from sales of newspapers, magazines and periodicals, and receipts from subscriptions from Illinois subscribers were subject to this tax. In the case of Calumet Publishing Co. v. McKibben, 41 C 3507, the circuit court of Cook County on March 17, 1944, found the collection of retailers' occupation tax measured by the receipts from the sale of newspapers and magazines was illegal and enjoined collection of the tax, but refused to enjoin the collection of the tax based upon receipts from books and sheet music. Upon appeal from the latter portion of the decree, (No. 28197 in this Court) the Attorney General confessed error, the cause was remanded and the decree extended to enjoin collection of the tax on sales of books and sheet music. Subsequent to the entry of these decrees, the Department of Revenue issued on August 11, 1947, a revised Rule 2 which stated that vendors of newspapers, magazines, periodicals, books, sheet music or phonographic recordations are not engaged in the business of selling tangible personal property at retail. Pursuant to this rule, the Department of Revenue, thereafter until August 1, 1961, did not seek to collect retailers' occupation tax upon receipts from the sale of magazines.

So matters stood until after the General Assembly amended section I of the Retailers' Occupation Tax by adopting Senate Bill No. 568 in 1961. This is the statute upon which the case turns, and we therefore set it forth in full.

"AN ACT to amend Section I of the `Retailers' Occupation Tax Act', approved June 28, 1933, as amended, for the purpose of indicating the General Assembly's intention to exclude the purchase, employment and transfer of newsprint and ink, whose primary purpose is the conveying of news, from the scope of the phrase `tangible personal property' as used in said Act.

"Whereas, the General Assembly desires to prevent discrimination against newspapers and in favor of competing news-conveying agencies that do not transfer tangible personal property; and

"Whereas, although the conveying of information which has a more permanent value in a tangible form causes the transfer of paper and other tangible personal property to assume a substantial and significant part of the transaction as a means of preserving as well as conveying such information (thus causing sales of books, phonograph records and other articles of commerce, which are in tangible form, and which contain information whose value is of a more permanent character than the information conveyed by newspapers, to be sales of tangible personal property); and

"Whereas, this is not the case with respect to information conveyed by newspapers because that information can lose its value even before being read, if not read immediately; and

"Whereas, the value and purchase price of newspapers attaches to the news and other information contained therein, rather than to the tangible characteristics of such newspaper, and such information has only a fleeting value and, because of its transitory character, would be just as valuable if conveyed by media (such as radio and television) that convey the news without transferring any tangible personal propetry.

"Now, Therefore, Be it enacted by the People of the State of Illinois, represented in the General Assembly:

"Section 1. Section 1 of the `Retailers' Occupation Tax Act', approved June 28, 1933 as amended, is ...


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