Appeal from the Circuit Court of Du Page County, the Hon.
Philip F. Locke, Judge, presiding.
MR. JUSTICE RYAN DELIVERED THE OPINION OF THE COURT:
Plaintiffs, Paul W. Hoffmann and other owners of real property in Du Page County, filed an amended complaint for declaratory judgment and injunctive relief in the circuit court of Du Page County against certain county and State officials in which they alleged the unconstitutionality of sections 20a-1 through 20a-3 of the Revenue Act of 1939 (Ill. Rev. Stat. 1973, ch. 120, pars. 501a-1 through 501a-3). In brief, those sections provide that upon application of the owner, and subject to certain conditions specified therein, real estate used for farming or agricultural purposes which has been so used for the three preceding years shall be valued for purposes of taxation on the basis of its use for farming or agriculture rather than its fair cash value, which is the basis upon which real estate is normally assessed under section 20 (Ill. Rev. Stat. 1973, ch. 120, par. 501). When such use changes, the person liable for taxes on that real estate must pay the difference between the taxes actually paid in each of the three preceding years and the amount which the taxes for each of those years would have been had the real estate been assessed at its fair cash value, together with five percent interest on such difference. The trial court held each of the sections in question to be unconstitutional, and defendants have appealed directly to this court pursuant to Supreme Court Rule 302(a)(1) (58 Ill.2d R. 302(a)(1)).
Plaintiffs' suit involved the application of sections 20a-1 through 20a-3 to various parcels of real estate in Du Page County for the years 1972, 1973 and 1974. The three sections in question were added in 1971 and provide as follows:
"Sec. 20a-1. In all counties with a population of more than 200,000, in addition to valuation pursuant to Section 20, upon the filing of an application under Section 20a-2 by the person liable for the taxes on that real property, real property which is used for farming or agricultural purposes and has been so used for the 3 years immediately preceding the year when the assessment is made shall be valued on the basis of its fair cash value, estimated at the price it would bring at a fair, voluntary sale for use by the buyer for farming or agricultural purposes, but at a level not higher than that permitted by Section 4 of Article IX of the Constitution of the State of Illinois.
Sec. 20a-2. The person liable for taxes on real property used for farming or agricultural purposes must file a verified application requesting the additional valuation provided for in Section 20a-1, with the county assessor of the county where the real property is located, by January 1 of each year for which that valuation is desired. * * * If the application shows the applicant is entitled to the valuation under Section 20a-1, the county assessor shall approve it; otherwise, he shall reject the application.
When such an application has been filed with and approved by the assessor, the assessor shall determine the valuation of the real property described in the application on the basis of each of Sections 20 [fair cash value] and 20a-1 [fair cash value for farming] and shall list those valuations separately. * * *
When the real property described in any application filed under this Section is no longer used for farming or agricultural purposes, the person liable for taxes on that real property must notify the county assessor, in writing, of that fact.
Sec. 20a-3. The valuation determined under Section 20a-1 shall be used for each year for which application is made and approved under Section 20a-2 and in which the real property is used for farming or agricultural purposes. When the real property is no longer used for such purposes, the person liable for taxes on that real property shall pay to the county treasurer, by the following September 1, the difference between the taxes paid in each of the 3 preceding years as based on a valuation under Section 20a-1 and what those taxes for each of those years would have been when based on the valuation under Section 20, determined in compliance with Section 4 of Article IX of the Constitution of the State of Illinois, together with 5% interest. If this difference is not paid by the following September 1, the amount of that difference shall be considered as delinquent taxes for the purposes of this Act." Ill. Rev. Stat. 1973, ch. 120, pars. 501a-1, 501a-2, 501a-3.
In 1973 section 20a-1 was amended, effective October 1, 1973, to apply to all counties rather than only those with populations of more than 200,000.
Plaintiffs' "Amended Complaint for Declaratory Judgment and Tax Injunction Relief" contained seven counts pertaining to various parcels of real estate which had been assessed at their value for farming purposes for 1972 and 1973 pursuant to approved applications by the respective owners. It was alleged that, in 1974, tax bills had been received indicating that additional taxes and interest thereon were due for 1972 and 1973 in accordance with the so-called "rollback" provisions of section 20a-3 as a consequence of alleged changes of use from agricultural or farming purposes. Plaintiffs prayed that sections 20a-1 through 20a-3 be held unconstitutional and void in that they violated the equal protection and due process clauses of the State and Federal constitutions and furthermore constituted a legislative classification of real estate for purposes of taxation in violation of section 4(b) of article IX of the Illinois Constitution of 1970. The trial court found the statute to be unconstitutional and ordered:
"1. That Chapter 120, Sections 501-a-1 through Sections 501-a-3 inclusive, Ill. Rev. Stat. 1973 are ineffective, unconstitutional, void, and without force of law and that taxes assessed against the real property of the plaintiffs herein pursuant to said provisions are void and without force of law.
2. That the defendants herein and their successors are permanently restrained and enjoined from exercising any powers, rights, or duties respecting the enforcement of such provisions against the plaintiffs herein.
The trial court did not specify the grounds on which it held the statute unconstitutional. Subsequent to the filing of defendants' notice of appeal, plaintiffs filed a petition in the circuit court requesting the court to clarify its prior judgment order so as to hold only the rollback provisions invalid. The trial court then entered what was apparently intended as a clarifying order, stating that its prior order "in no way bars the filing and processing of agricultural tax applications by the owners of real estate in Du Page County, Illinois pursuant to the provisions of Ill. Rev. Stat. C. 120, secs. 501-a-1 through 501-a-3." This supplemental order, entered subsequent to the filing of notice of appeal, was of no effect. City of Chicago v. Myers (1967), 37 Ill.2d 470.
Defendants argue that there was no jurisdiction in equity to contest the constitutionality of the statute, since the criteria for such actions as set forth in Illinois Bell Telephone Co. v. Allphin (1975), 60 Ill.2d 350, and Clarendon Associates v. Korzen (1973), 56 Ill.2d 101, were not met. They contend further that under the doctrines of waiver and estoppel plaintiffs should be barred from challenging the validity of a statute under which they voluntarily applied for and received benefits. With respect to the first contention, both Illinois Bell and Clarendon recognize that taxpayers may seek relief in equity where an act imposing a tax is attacked as unconstitutional in its entirety. Here, the gist of plaintiffs' suit is that the statute pursuant to which their real estate was taxed is unconstitutional and void, and we accordingly conclude that equity jurisdiction lies. Cf. La Salle National Bank v. County of Cook (1974), 57 Ill.2d 318.
The questions of waiver and estoppel are less easily resolved. It is apparent that plaintiffs have voluntarily elected to receive the benefits of the lower valuation for tax purposes on the basis of use of the property for farming or agriculture and are now attempting to avoid the burdens of the rollback provisions of that same statute. Defendants have cited several decisions of this court which applied the general rule that a person who voluntarily accepts the benefits of a statute will thereafter be precluded from challenging its validity unless questions of public policy or public morals are involved. (Edward P. Allison Co. v. Village of Dolton (1962), 24 Ill.2d 233, 236; Cochennet v. Ambrose (1961), 21 Ill.2d 520; Layton v. Layton (1954), 4 Ill.2d 241; Chicago & Eastern Illinois Ry. Co. v. Miller (1923), 309 Ill. 257.) In Arnett v. Kennedy (1974), 416 U.S. 134, 152-53, 40 L.Ed.2d 15, 32, 94 S.Ct. 1633, 1643, the United States Supreme Court cited various of its decisions in which it had "viewed skeptically the action of a litigant in challenging the constitutionality of portions of a statute under which it has simultaneously claimed benefits." We view plaintiffs' action in the same manner. However, application of the doctrines of waiver and estoppel in this case would preclude the determination of important questions of first impression affecting taxpayers and taxing bodies throughout the State. Under the particular circumstances of this case, we conclude that the trial court did not err in denying defendants' motions to dismiss the complaint on the grounds of waiver and estoppel.
The threshold constitutional question is whether sections 20a-1 through 20a-3 of the Revenue Act constitute an invalid classification of real property for purposes of taxation in violation of sections 4(a) and 4(b) of article IX of the 1970 Illinois Constitution. Those sections provide as follows:
"Section 4. REAL PROPERTY TAXATION
(a) Except as otherwise provided in this Section, taxes upon real property shall be levied uniformly by valuation ascertained as the General Assembly shall provide by law.
(b) Subject to such limitations as the General Assembly may hereafter prescribe by law, counties with a population of more than 200,000 may classify or to continue to classify real property for purposes of taxation. Any such classification shall be reasonable and assessments shall be uniform within each class. * * *"
Defendants rely upon section 1 of article IX of the Constitution, which provides:
"The General Assembly has the exclusive power to raise revenue by law except as limited or otherwise provided in this Constitution. The power of taxation shall not be surrendered, suspended, or contracted away."
They argue that this provision affirms the sovereign power of the State in the area of taxation except as specifically limited by the Constitution; that nothing in section 4 of article IX prohibits the General Assembly from classifying real property for purposes of taxation; that section 4(b) merely contains a grant of authority to counties with a population of more than 200,000 to classify real property but does not divest the legislature of authority to do the same; and that, in any event, sections 20a-1 through 20a-3 constitute a valid exercise of the General Assembly's power to prescribe limitations upon the authority of counties to classify real property. Plaintiffs argue that we are not concerned here with the question of the general power to tax which is vested exclusively in the legislature pursuant to section 1 of article IX, but are instead dealing with the specific question of the method by which real property may be assessed for taxation; that such method is expressly limited by sections 4(a) and 4(b); that section 4(a) sets forth the general requirement of uniformity in real property taxation; that section 4(b) constitutes an exception to that rule by granting a limited right to classify to counties with populations of more than 200,000; and that while such right to classify is subject to limitation by the General Assembly, the General Assembly itself may not enact legislation imposing mandatory classification of real estate throughout the State.
The debate concerning section 4 of article IX in the constitutional convention was lengthy, and the proposals concerning that section were controversial. The original proposal of the committee on Revenue and Finance concerning real property taxation was section 4.1 of the committee's proposal and provided:
"Any county over 200,000 population is authorized to classify real property for taxation purposes. The General Assembly shall establish a system of classification of real property for taxation purposes, which system may be adopted by any other county in lieu of uniform taxation of real property. In any county the level of assessment or rate of taxation of the highest class shall not be more than two and one-half times the level of assessment or rate of tax of the lowest class." 7 Record of Proceedings, Sixth Illinois Constitutional Convention 2108, hereafter referred to as Proceedings.
This proposal thus authorized counties with 200,000 population to classify real property for taxation purposes and permitted the remaining counties of the State to adopt a system of classification which the General Assembly would be required to establish.
Some delegates were strongly opposed to any form of classification of real property, while others favored classification in all counties. In any event, it was generally recognized by the committee and by the convention that the constitution which was to be submitted to the voters for ratification would of necessity have to preserve the de facto classification of real property that had been established in Cook County if there was to be any hope of ratification. (3 Proceedings 1898.) With the principle of classification established for Cook County, the delegates from some counties adjacent to Cook also desired that their counties be empowered to classify. They felt since these adjacent counties had overlapping taxing districts with Cook County, it was necessary, in order to have equality of taxation in the overlapping taxing districts, that the adjacent counties also be permitted to classify. The committee had arrived at the proposal's population figure of 200,000 as one that would include all of the counties adjacent to Cook and some of the other larger counties in the State which desired to classify real property. The part of the committee proposal giving the option to the remaining counties was designed to establish a uniform classification that could be adopted by counties of under 200,000 population.
During the debate on this proposal, an amendment was offered which would have prohibited all classification of real property for tax purposes. The amendment was defeated. (3 Proceedings 1997-2016.) Following further inconclusive debate on the original proposal, Chairman Karns of the Committee on Revenue and Finance, in an attempt to find a middle ground, offered a compromise amendment to the proposal. (3 Proceedings 2021-2022.) The Karns compromise struck the first two sentences of the original proposal and substituted the following:
"Taxes upon real property shall be levied uniformly by valuation which shall be ascertained in such manner as the General Assembly shall prescribe by law provide by law, provided that, subject to such limitations as the General Assembly may hereafter prescribe by law, counties may classify or continue to classify real property for purposes of taxation. Any such classification shall be reasonable and assessments shall be uniform within each class. Real property used in agriculture shall be assessed at the same level of assessment as single-family residential real property." (3 Proceedings 2021.)
Under this proposed amendment, all counties would have been permitted to classify real property, subject to limitations by the General Assembly. This amendment was adopted. 3 Proceedings 2029.
Immediately, a motion was made to substitute another proposal for section 4.1 which would have prohibited all classification of any kind of real property in counties of under 2 million population. (3 Proceedings 2029.) This motion failed. 3 Proceedings 2032.
The compromise proposal of Chairman Karns which had been adopted was then referred to the Committee on Style, Drafting, and Submission. When the convention considered the report of that committee an amendment was adopted which permitted classification authorized under the Karns compromise only by counties of 200,000 population. (5 Proceedings 3896.) This proposal was finally approved essentially in this form and became article IX, section 4(b), of the Constitution.
Although there were some delegates who opposed all forms of classification, the debate of the convention demonstrates primarily a concern for the wisdom of authorizing classification by individual counties, and not for classification by the General Assembly. As one delegate expressed it, if counties were to be permitted to classify, "We are very apt to have a hodge-podge of classification * * *." (3 Proceedings 2024.) Another delegate opposed the Karns amendment because he felt that, absent action by the General Assembly, each county could design its own scheme of classification. (3 Proceedings 2027.) Also, the Committee on Revenue and Finance, by way of explanation of its original proposal, stated:
"The Committee feels that it would be undesirable to permit 102 different systems of real estate taxation in the state." (7 Proceedings 2117.)
Also, on the two occasions mentioned above, attempts were made to prohibit classification of real property. These proposals would have prohibited classification by the General Assembly, as well as by counties. In both instances the proposals were defeated.
It is impossible to gather from the debates a clear sense of the convention on the question of whether the General Assembly, under the proposal of the committee or under the Karns amendment, was to be prohibited from classifying real property for taxation.
Chairman Karns, in explaining his proposed amendment, stated:
"The second sentence provides that counties may classify or continue classification but subject to such limitations as the General Assembly may provide. I suggest that this provision meets the objection voiced today in that the General Assembly retains the right to prescribe or proscribe a classification and also the right to provide the mechanics by which classification may be done.
* * * The proposal allows Cook County to continue its system of classification, subject to legislative pre-emption and control. * * *" (3 Proceedings 2022.)
Delegate Leahy asked Chairman Karns "Does it, in essence, just continue what we have today, subject to future restriction or expansion or what have you by the General Assembly?" and Chairman Karns responded, "Correct." (3 Proceedings 2023.) Delegate Gertz then asked: "Chairman Karns, what sort of limitation do you encompass within the phrase, `provided subject to such limitations as the General Assembly may hereafter prescribe by law'?" Mr. Karns answered: "* * * This would be a right for the General Assembly to in whole or in part pre-empt the subject matter of classification by dealing with it by law as they will as they might." 3 Proceedings 2023.
In addition to the above comments, which indicate a rather definite authority vested in the General Assembly to "prescribe" and "proscribe" classification by the counties and to preempt the counties' authority in that regard, there are other parts of the debate which indicate a lesser authority vested in the General Assembly, as indicated by the following:
"MR. HENDREN: I would like to ask Mr. Karns a question. Delegate Karns, in the second sentence, my question is not being an attorney could the General Assembly by statute mandate classification in my county?
MRS. LEAHY: Mr. Karns, I am really just trying to understand what this amendment does.
MRS. LEAHY: Now as I understand it, in your first sentence you decree uniformity but you do not define any standard upon which the uniformity shall be measured. Right? The General Assembly provides that. It can be 55 percent of fair market value or cash value or full fair value or whatever they set up. Right?
MRS. LEAHY: The only time they move into the picture, in terms of classification, is after the county has decided to classify. Right?
MR. KARNS: Wrong. I think they could I would assume they could move into the picture of classification at any time, if they chose.
MRS. LEAHY: But you answered Mr. Hendren and said they could not mandate classification.
MR. KARNS: No, that's right.
MRS. LEAHY: Could they decide
MR. KARNS: That's a different proposition, I submit mandating it and enacting legislation in that subject.
MRS. LEAHY: Well, I thought one included the other. Let me ask, could the General Assembly pass a statute saying that any county over 200,000 population must classify must do it in the following manner?
MR. KARNS: No, they cannot require classification, but they may prescribe guidelines, whether or not any county is classified.
MRS. LEAHY: Okay. Now so in a sense, though, they really only have effect after the county has decided to classify. Then they can prescribe how.
MR. KARNS: No, no. They could set up standards prior to any classification ...