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Dept. of Revenue v. Jos. Bublick & Sons

OPINION FILED APRIL 9, 1976.

THE DEPARTMENT OF REVENUE, PLAINTIFF-APPELLEE,

v.

JOSEPH BUBLICK & SONS, INC., ET AL., DEFENDANTS-APPELLANTS.



APPEAL from the Circuit Court of Cook County; the Hon. RAYMOND S. SARNOW, Judge, presiding.

MR. JUSTICE LORENZ DELIVERED THE OPINION OF THE COURT:

Defendant, Max L. Bublick, appeals from a judgment holding him personally liable as an officer of defendant Joseph Bublick & Sons, Inc. (corporation) for $107,932.73 in unpaid retailers' occupation taxes. He contends that the evidence did not establish (1) that plaintiff instituted proper proceedings for collection of the unpaid taxes from the corporation before proceeding against him personally, nor (2) that he wilfully failed to file the correct tax returns.

Plaintiff's complaint, filed January 17, 1974, alleged in Count I that the corporation sold tangible personal property for use and consumption during the period from July 1969 thru April 1972; that it failed to perform its statutory duty to file correct forms showing its retail sales and to pay a tax as required under the Retailers' Occupation Tax Act (Ill. Rev. Stat. 1971, ch. 120, par. 440-453); and that $92,092.35 plus interest, less $5,000 paid on account of said liability by the corporation, was due and owing. In Count II, plaintiff alleged, inter alia, that defendants Max L. Bublick, David Holland, Morris Bublick and Sol N. Garland organized, owned, operated, supervised and managed the corporation; that although plaintiff took "proper proceedings" against the corporation, it was "unable to pay the amounts due plaintiff"; that the individual defendants were personally liable for the taxes due according to section 13 1/2 of the Act *fn1 (Ill. Rev. Stat. 1971, ch. 120, par. 452 1/2) by virtue of their wilful failure to file; and that the individual defendants were similarly liable in the amount of $87,092.35 plus interest.

The corporation's answer stated that it also sold personal property for resale and that its failure to pay the balance due resulted from "an inability to make said payment or payments, together with an unwillingness of plaintiff to accept partial payments over a period of time." The individual defendants denied that they had breached any duty under section 13 1/2 of the Act and further stated "that plaintiff has attempted to collect the taxes due from Joseph Bublick & Sons, Inc., and that Joseph Bublick & Sons, Inc. is unable to pay the amounts due."

The following pertinent evidence was adduced at trial.

For plaintiff:

Max L. Bublick under section 60

He was a vice-president and treasurer of the corporation from July 1969 through April 1972. It was his duty to see that the store had sufficient merchandise to continue operation. He was the only officer with authority to assemble financial information for the purpose of preparing sales tax returns. He determined what would be reported either as a sale for resale or as a sale for use and consumption. He was unable to obtain records from his transient customer peddlers who purchased property for resale in the Maxwell Street area near the corporation's store. He estimated "roughly about 50%" of the gross receipts represented sales for resale. The sales memoranda did not indicate whether a given transaction represented a sale for resale. However, if a sale was made to the ultimate consumer the sales slip did show that a sales tax had been charged and was paid. When he became aware that he had to keep resale numbers on sales to peddlers he began to pay taxes on 100% of his gross receipts. On June 29, 1972, he admitted that $92,342.36 was due and owing to plaintiff. A $5,000 payment was subsequently paid to plaintiff. The corporation offered to give the keys to the store to plaintiff, but plaintiff declined this offer. The corporation no longer operates the store. The corporate assets were reduced to eleven or twelve thousand dollars in cash and put into a corporate account. This account has been offered to plaintiff.

When questioned by his attorney, he stated that he was in the store about one hour per week. Although he would take the receipts from the register, he never saw the sales slips. The corporation met several times with plaintiff. On one occasion the corporation offered to pay an additional $5,000 down and $2,000 per month, but plaintiff never responded to this offer.

On redirect, he admitted plaintiff had indicated that it would accept 25 or 30 percent down and the balance in 10 or 12 months.

David Holland under section 60

He was a vice-president and the secretary for the corporation. He did not have any corporate duties regarding financial data that applied to the monthly sales tax returns. He never signed any tax returns for the corporation.

Sol N. Garland under section 60

He was the assistant secretary and bookkeeper for the corporation. He signed all tax forms submitted to plaintiff. He prepared the tax forms from the figures in the cash receipts journal. Defendant directed him to insert 50% of the cash receipts total in the journal on ...


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