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Scoa Industries, Inc. v. Howlett

OCTOBER 16, 1975.

SCOA INDUSTRIES, INC., PLAINTIFF-APPELLEE,

v.

MICHAEL HOWLETT, SECRETARY OF STATE, DEFENDANT-APPELLANT.



APPEAL from the Circuit Court of Cook County; the Hon. DANIEL A. COVELLI, Judge, presiding.

MR. JUSTICE MEJDA DELIVERED THE OPINION OF THE COURT:

This is an appeal from an order of the circuit court of Cook County denying defendant's motion to dismiss and for summary judgment, granting plaintiff's motion for summary judgment, and entering judgment for plaintiff and against defendant in the sum of $8,824.09, plus interest. Defendant seeks reversal of the judgment order and contends that:

(1) the doctrine of sovereign immunity bars the action;

(2) the tax was paid voluntarily and cannot be recovered;

(3) the Illinois Court of Claims has exclusive jurisdiction;

(4) plaintiff failed to exhaust its administrative remedies; and

(5) the claim is barred by laches.

We reverse.

On March 30, 1970, plaintiff, Scoa Industries, Inc., a Delaware corporation [Scoa], filed a "tentative" annual report with defendant, Illinois Secretary of State, using the printed form provided by defendant's office. (Ill. Rev. Stat. 1969, ch. 32, par. 157.13.) In response to a question on the form plaintiff stated that it did not elect to pay a franchise tax based upon its entire stated capital and paid-in surplus. The election required answers to questions 10 through 14 to provide information designating the value of its property and gross money amount of business transacted, everywhere and only in the State of Illinois. Plaintiff printed thereon: "10-14 cannot be answered at the present time. As soon as the information is available we will forward." On June 30, 1970, plaintiff wrote a letter to defendant which contained the supplemental information. The letter was returned to plaintiff with the handwritten notation on the bottom: "Sorry, can not accept. Please execute the form enclosed." On July 9, 1970, defendant's office caused to be issued a franchise tax assessment in the sum of $8,824.09, based upon the entire stated capital and paid-in surplus listed in Scoa's "tentative" annual report. The assessment notice advised plaintiff that objection to the assessed amount could be made within 10 days, so that a hearing could be held as provided by statute, and also that the instant notice would be the only notice sent.

On July 20, 1970, plaintiff filed a supplemental annual report on the appropriate form which contained the previously omitted information in items 10 through 14. On July 20, 1970, defendant immediately sent to Scoa an assessment, designated "In re' adjustment supp." based on the additional information contained in the supplemental report. Plaintiff was therein advised that $93.47 was owed and that plaintiff could, within 10 days, object to the assessment. On July 28, 1970, plaintiff paid to defendant the sum of $8,824.09, and on August 4, 1970, paid the sum of $93.47. No protest or objection was made at the time of either payment. In a letter to defendant's office, dated April 14, 1972, plaintiff requested a refund of the "erroneous payment of $8,824.09" on the "erroneous billing of July 9, 1970," and stated:

"Due to a change of personnel within the taxpayer's accounting office the erroneous bill was paid on July 28, 1970, and on August 4, 1970 the correct billing of $93.47 was also inadvertently paid by the taxpayer."

On May 18, 1973, plaintiff filed a three-count complaint in which it sought a rescission of the payment and refund of the $8,824.09, together with interest. Each count alleged inter alia that the payment "was made under legal duress, and through mistake, inadvertence, and oversight, and without benefit of counsel." Throughout the entire complaint plaintiff characterized the payment as erroneous.

Defendant filed a motion to dismiss the complaint, and alternatively, for summary judgment against plaintiff. Plaintiff answered and filed a cross-motion for summary judgment. Defendant's motion alleged that plaintiff's payment was voluntary, that no protest or objection was filed previously, that there are no statutory provisions allowing or providing for a refund of taxes erroneously paid, and that plaintiff's letter of August 14, 1972, clearly demonstrates that the tax was paid erroneously and not under duress. Plaintiff answered the motion by alleging that the payment constituted a mutual mistake of material fact. It was further alleged, for the first time and not in the alternative, that the tax payment was made under the threat or penalty of revocation of its certificate of authority to do business in Illinois (Ill. Rev. Stat. 1969, ch. 32, pars. 157.122(h), 157.142), and that such threat constituted duress. On August 24, 1973, the trial court denied defendant's motion, granted plaintiff's motion and entered judgment for plaintiff in the sum of $8,824.09, plus interest from the date of payment.

The Business Corporation Act (Ill. Rev. Stat. 1973, ch. 32, par. 157.1 et seq.) substantially provides, in pertinent part: (1) that the Secretary of State refrain from filing articles, papers, certificates, reports and the like until fees, franchise taxes and charges are paid by any corporation, and during the period of default in such payment that the corporation is prohibited from maintaining any action at law or suit in equity (par. 157.142); (2) that the Secretary of State give notice of the franchise assessed, and upon request, hear objections thereto for adjustment after a hearing, and providing that if the taxes are not paid by July 31 the Secretary certify that fact to the Attorney General who may institute action against the corporation for recovery of the tax and any penalty (par. 157.143); (3) that a foreign corporation may appeal to the circuit court, inter alia, any ...


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