Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 78-C-3746 -- Nicholas J. Bua, Judge .
Before Swygert, Circuit Judge, Moore, Senior Circuit Judge,*fn* and Tone, Circuit Judge.
This appeal involves the Federal Tax Injunction Act and its construction with section 1983 of the Civil Rights Act. Plaintiff-appellant LaSalle National Bank*fn1 brought this civil rights injunction action under 42 U.S.C. § 1983 against Edward J. Rosewell, Treasurer of Cook County and Thomas M. Tully, Assessor of Cook County. The action sought to enjoin the collection of excessive real estate taxes for 1977 allegedly imposed in violation of plaintiff's due process and equal protection rights under the Fourteenth Amendment. The sole issue on appeal is whether federal district court jurisdiction over this action is barred by the Tax Injunction Act of 1937. 28 U.S.C. § 1341. We conclude that jurisdiction is not barred and reverse the judgment of the district court.
Plaintiff is the owner of a twenty-two unit apartment building in the all black, economically depressed community of East Chicago Heights in Cook County, Illinois.*fn2 On January 1, 1977 this property had a fair cash value of $46,000. According to Illinois statute, the property should have been assessed at 33% Of its fair cash value: approximately $15,000. Nevertheless, the assessor assessed the property at $52,150, more than triple the correct assessment. As a result plaintiff's tax bill was $6,106 rather than $1,775. This bill was over three times the amount plaintiff would have been required to pay if she had been taxed at the correct rate.
Plaintiff alleges that the assessor knowingly as official policy or as governmental custom has maintained a system of assessment in Cook County which has produced egregious disparities in the ratio between the assessed valuation and the fair cash value of real property. The complaint further alleges that these over-assessments are greater in frequency and size in older communities in which property is owned and inhabited primarily by members of racial minority groups and the economically disadvantaged.
In 1977, as well as in each of the preceding three years (in which plaintiff's property similarly was overassessed), plaintiff sought administrative relief from the Board of Tax Appeals of Cook County. In each of those years, the Board referred plaintiff's complaint to the assessor for recommendation, and in each year the assessor recommended "no change" in the assessment. The Board denied plaintiff's petition for administrative relief each year.
Having been denied administrative relief, plaintiff's only remedy at law was to pay the full amount of the tax claimed by the county collector (defendant Rosewell, Treasurer of Cook County) pursuant to the assessor's assessment, and thereafter objecting and suing for refund at the collector's annual Application for Judgment in the Cook County Circuit Court. See Ill.Rev.Stat.1971, ch. 120, §§ 675, 716. According to plaintiff, the customary delay in receiving refunds after a successful prosecution of a tax refund suit is two years. Further, under Illinois law, no interest may be paid to a successful claimant who has secured the refund of real estate taxes paid under protest.
Plaintiff pursued her legal remedy in 1974, 1975, and 1976 and ultimately received refunds for the three years in May, 1978. Plaintiff had been required to deposit payments for illegally exacted taxes in the approximate amounts of $4,600 for 1974, $3,650 for 1975, and $3,950 for 1976, for three, two and one years, respectively. At 8% Interest (the average prime rate for the three-year period), plaintiff lost approximately $2,000 because of her inability to use money which ultimately was deemed to be rightfully hers. Plaintiff contends that approximately $4,300 of her 1977 tax bill of $6,106 is an illegal overcharge and that she would be forced to deposit the $4,300, with no possibility of receiving interest on a refund, along with her correct tax payment in order to seek legal redress.
Plaintiff has not paid her 1977 taxes. Instead, on September 19, 1978 she filed this action in federal district court to enjoin the county collector from listing, advertising, proceeding to judgment and order of sale, or selling plaintiff's property as payment for any outstanding tax bill in excess of the amount she is legally required to pay. On November 3, 1978 defendants moved to dismiss the complaint on the grounds that it was barred by the Tax Injunction Act. 28 U.S.C. § 1341. The district court agreed with defendants and dismissed plaintiff's complaint on November 30, 1978.*fn3 This appeal followed.
The Tax Injunction Act mandates that federal district courts "shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the court of such State." 28 U.S.C. § 1341. This command has been followed consistently. See e. g., Tully v. Griffin, 429 U.S. 68, 97 S. Ct. 219, 50 L. Ed. 2d 227; Huber Pontiac, Inc. v. Whitler, 585 F.2d 817 (7th Cir. 1978). The converse of this proposition, however, is equally true. As the legislative history of the Act clearly indicates, an action for injunctive relief brought in a federal district court "will not be withdrawn from the jurisdiction of the . . . court Except where there is a plain, speedy, and efficient remedy at law or in equity in the courts of the State. . . ." S.Rep.No.1035, 75th Cong., 1st Sess. 2 (1937) (emphasis added).
Defendants contend that there are two legal avenues available to plaintiff which offer "plain, speedy and efficient" relief within the judicial system of Illinois. First, defendants argue that the delay in payment and the failure to pay interest on refunds made pursuant to successful suits for tax refunds brought under Ill.Rev.Stat.1977, ch. 120, §§ 675, 716, do not render this statutory remedy (paying the full amount of the tax bill and then suing for refund) inadequate.*fn4 Our disagreement with this position is developed in Part A of this opinion. Second, defendants suggest that plaintiff can redress any alleged grievances concerning her property tax assessment by filing a civil rights action under 42 U.S.C. § 1983 in state court. The availability of this mode of relief, defendants argue, provides a "plain, speedy and efficient" remedy in the Illinois courts, thereby barring the equitable jurisdiction of the federal courts. Our analysis of this proposition and our conclusion that the availability of a section 1983 action in state court does not bar ...