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Itt Abrasive Products Co. v. Lewis

MAY 18, 1973.

ITT ABRASIVE PRODUCTS COMPANY, PLAINTIFF-APPELLEE,

v.

JOHN W. LEWIS, SECRETARY OF STATE, DEFENDANT-APPELLANT.



APPEAL from the Circuit Court of Cook County; the Hon. EDWARD J. EGAN, Judge, presiding.

MR. PRESIDING JUSTICE DRUCKER DELIVERED THE OPINION OF THE COURT:

Defendant appeals from a judgment granting plaintiff's prayer that it be permitted to pay its 1967 Illinois franchise taxes and license fees on the basis of what is commonly referred to as the "in state-out of state" apportionment formula. Defendant contends that plaintiff was under obligation to pay such taxes and fees on the basis of its entire stated capital and paid-in surplus. *fn1

The facts were stipulated to by the parties and in relevant part are as follows:

1. Prior to December 31, 1966, Plaintiff, ITT ABRASIVE PRODUCTS COMPANY, a Corporation of Michigan, hereinafter referred to as `ABRASIVE' was known as STERLING GRINDING WHEEL COMPANY, a Michigan Corporation, hereinafter referred to as `STERLING'. Its stated capital was $50,000 and it had no paid-in surplus.

2. Also prior to December 31, 1966, THE PENINSULAR GRINDING WHEEL COMPANY, a Corporation of Michigan, hereinafter referred to as `PENINSULAR' had a stated capital of $25,000 with no paid-in surplus.

3. For the years through December 1966, both these corporations filed annual reports and paid the minimum Franchise Tax under the Illinois Business Corporation Act based upon the election of the respective corporations to pay such Tax based on their entire stated capital and paid-in surplus.

4. Pursuant to an agreement of merger dated December 15, 1966, effective December 31, 1966, entered into between STERLING and PENINSULAR, PENINSULAR was merged into STERLING and the stated capital of STERLING, whose name was changed by the agreement of merger to ITT ABRASIVE PRODUCTS COMPANY, remained at $50,000.

5. PENINSULAR was later dissolved as a corporation in the State of Michigan and was withdrawn from doing business in the State of Illinois, and proper notification was given the defendant herein.

6. The records of the defendant disclose that it received on February 28, 1967, an Annual Report (* * * ABRASIVE's Exhibit 3) in the name of STERLING which set forth a stated capital of $50,000 and no paid-in surplus. In this Annual Report ABRASIVE elected to be taxed on its entire stated capital of $50,000 and no paid-in surplus. The records of ABRASIVE disclose that another Annual Report (* * * ABRASIVE's Exhibit 4) was ostensibly mailed on February 21, 1967, to the defendant. The records of defendant do not reflect the receipt of Exhibit 4 in which ABRASIVE elected to be taxed on an `in state out of state' basis, the alternative method.

11. On June 24, 1968, ABRASIVE executed and forwarded to Defendant its Supplemental Annual Report for the year 1968, * * * setting forth a stated capital of $50,000 and paid-in surplus of $4,547,460 for a total of $4,597,460, and in said report elected to be taxed on the `in state out of state' basis."

Based upon the facts set forth in paragraph 6 above, the trial court concluded that there was a presumption that plaintiff's other annual report (Abrasive's Exhibit 4) requesting taxation on the basis of the apportionment formula had been received by defendant and that this presumption had not been rebutted by the fact that defendant's records failed to show that said report was received. The court, as noted, then ordered that plaintiff be permitted to pay its taxes and fees based upon said apportionment formula. Defendant contests the aforesaid conclusion.

Opinion

The rule of law relied upon by the trial court is set forth in Talmage v. Union Central Life Insurance Co., 315 Ill. App. 623, 639, 640, 43 N.E.2d 575, wherein the court stated:

"The rule is that proof of the due mailing of a letter raises the presumption of its receipt, and when the receipt thereof is denied, the only ...


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