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People Ex Rel. #3 J. & E. Discount v. Whitler

OPINION FILED OCTOBER 9, 1979.

THE PEOPLE EX REL. #3 J. & E. DISCOUNT, INC., ET AL., PLAINTIFFS-APPELLEES AND CROSS-APPELLANTS,

v.

ROBERT M. WHITLER, ACTING DIRECTOR, DEPARTMENT OF REVENUE ET AL., RESPONDENTS-APPELLANTS AND CROSS-APPELLEES.



APPEAL from the Circuit Court of Cook County; the Hon. ARTHUR L. DUNNE, Judge, presiding.

MR. JUSTICE PERLIN DELIVERED THE OPINION OF THE COURT:

Respondents, Robert M. Whitler, Acting Director of the Department of Revenue, and Norman L. Marcus, hearings referee of the Department of Revenue, appeal from an order of the circuit court of Cook County issuing a writ of prohibition against respondents. The writ enjoined respondents from conducting an administrative hearing to determine whether certain packages of cigarettes, which were seized from plaintiffs pursuant to a search warrant, should be confiscated and forfeited to the State. Plaintiffs, #3 J. & E. Discount, Inc., and Victor Brown, filed a cross-appeal from the court's order which limited the scope of the writ of prohibition to the issues of confiscation and forfeiture and which did not enjoin the Department from conducting an administrative hearing to determine whether civil penalties other than confiscation and forfeiture should be imposed.

The issues presented for review are (1) whether, after certain packages of cigarettes are seized pursuant to a search warrant issued by the circuit court, the Department of Revenue must proceed in the circuit court rather than through the administrative process to determine whether such packages of cigarettes should be confiscated and forfeited; and (2) whether, after certain packages of cigarettes are seized pursuant to a search warrant, the Department of Revenue may impose penalties other than confiscation and forfeiture.

We reverse in part and affirm in part.

On December 22, 1976, a search warrant was issued by the circuit court of Cook County, pursuant to a complaint filed by two agents of the Illinois Department of Revenue. The warrant authorized a search of plaintiffs' premises and seizure of all packages of cigarettes without valid Illinois cigarette tax stamps, all counterfeit cigarette tax stamps, and all records pertaining to the purchase and sale of cigarettes by plaintiffs. The search warrant was executed on December 23, 1976, by agents of the Illinois Department of Revenue (hereinafter "the Department") and the agents seized approximately 42,000 packages of cigarettes bearing allegedly counterfeit revenue stamps. Criminal charges were instituted against plaintiff Brown in the circuit court of Cook County. On March 10, 1977, plaintiffs were served with notice that on March 29, 1977, the Department was going to conduct a hearing pursuant to sections 18a and 18b of the Cigarette Tax Act (hereinafter the Act) to determine whether the packages of cigarettes that were seized should be declared confiscated and forfeited and whether a civil monetary penalty should be assessed by the Department. Ill. Rev. Stat. 1975, ch. 120, pars. 453.18a and 453.18b.

On March 21, 1977, plaintiffs filed a petition for a writ of prohibition requesting that the Department be enjoined from conducting any hearing relating to the packages of cigarettes that had been seized. Plaintiffs alleged that the Department had no jurisdiction to proceed under sections 18a and 18b of the Act because the packages of cigarettes had not been seized without a warrant under section 18 (Ill. Rev. Stat. 1975, ch. 120, par. 453.18). Plaintiffs further alleged that since the Department seized the cigarettes with a search warrant pursuant to section 20 of the Act (Ill. Rev. Stat. 1975, ch. 120, par. 453.20), only the circuit court had jurisdiction to determine whether the cigarettes should be confiscated and forfeited.

On March 21, 1977, the trial court issued ex parte a temporary writ ordering defendants to desist and refrain from any further proceedings until March 30, 1977.

On March 30, 1977, defendants filed a motion to quash the temporary writ of prohibition and to dismiss the petition, alleging that plaintiffs failed to allege the existence of an emergency or of irreparable damage which would justify issuance of the writ. Defendants further alleged that the Act vests the Department with jurisdiction to hold hearings to determine whether packages of cigarettes are properly tax stamped and that plaintiffs were not being denied due process because the Act provides for administrative review of decisions by the Department.

On May 3, 1977, the trial court denied defendants' motion to quash the temporary writ and to dismiss the petition. The court issued a peremptory writ of prohibition ordering defendants to desist and refrain from any further proceedings to determine whether the cigarettes in question should be confiscated and forfeited.

Defendants filed a notice of appeal from the order of May 3, 1977. Thereafter defendants filed a motion to dismiss the appeal and to remand the cause to the circuit court because a nolle prosequi order had been entered in the criminal action against plaintiff Brown on April 14, 1977, prior to the issuance of the peremptory writ, but the circuit court was not informed of the order. Further, a motion to quash the search warrant which had been filed by Brown in the criminal action was never considered since the action was dismissed. On December 2, 1977, this court dismissed the appeal without prejudice and remanded the cause to the circuit court.

On January 3, 1978, defendants filed a motion to vacate the order of May 3, 1977, and to quash the writ of prohibition, alleging that since no criminal prosecution is pending, the issue of the search warrant is irrelevant and the Department should be allowed to proceed with the civil process and to impose civil penalties. Plaintiffs' answer to the motion alleged that section 20 of the Act contains a legislative mandate that when a search warrant is issued, the Department is bound to proceed civilly in the circuit court.

On January 11, 1978, the court denied defendants' motion to vacate the order of May 3, 1977, and to quash the writ of prohibition. The court's order stated that the writ was limited to prohibiting defendants from conducting an administrative hearing to determine whether the packages of cigarettes should be confiscated and forfeited.

Plaintiffs filed a motion for reconsideration requesting the court to prohibit any and all proceedings by defendants. On January 13, 1978, the trial court denied the motion for reconsideration. Defendants appeal from the order of May 3, 1977, issuing the writ of prohibition, and plaintiffs cross-appeal from the orders of January 11 and 13, 1978.

Defendants contend that the trial court erred in issuing the writ of prohibition because the Cigarette Tax Act grants the Department authority to hold hearings whenever packages of cigarettes are alleged to be without valid revenue stamps. Defendants argue that since the criminal charges were dismissed, the search warrant is immaterial and defendants should be allowed to proceed within the Department. Plaintiffs contend that section 20 of the Act requires defendants to proceed in circuit court rather than to conduct a ...


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