Appeal from the Circuit Court of Cook County, the Hon. Nathan
M. Cohen, Judge, presiding.
MR. CHIEF JUSTICE GOLDENHERSH DELIVERED THE OPINION OF THE COURT:
Rehearing denied November 30, 1979.
Plaintiff, Charles A. Getto, "individually and on behalf of all persons similarly situated," filed this action in the circuit court of Cook County against defendants, the city of Chicago and Illinois Bell Telephone Co. (Bell), alleging that defendants had erroneously collected from Bell's customers sums greatly in excess of the amounts due under the defendant city's municipal message tax. On behalf of all Bell customers in the city of Chicago, plaintiff sought a declaratory judgment, a temporary injunction, a permanent injunction, an accounting, a refund of tax moneys, and an award of attorney's fees. The city and Bell filed separate and joint motions to dismiss the complaint; the circuit court denied the motions to dismiss and issued a preliminary injunction directing Bell to segregate and sequester that portion of the message tax alleged by plaintiff to be excessive. Both defendants appealed from the circuit court's interlocutory order (58 Ill.2d R. 307(a)(1)), and we allowed defendants' motions for direct appeal to this court under Rule 302(b) (58 Ill.2d R. 302(b)).
There are several issues presented in this appeal, but the controlling question involves the construction of section 8-11-2 of the Illinois Municipal Code (Ill. Rev. Stat. 1977, ch. 24, par. 8-11-2), which in pertinent part provides:
"The corporate authorities of any municipality may tax any or all of the following occupations or privileges:
1. Persons engaged in the business of transmitting messages by means of electricity, at a rate not to exceed 5% of the gross receipts from such business originating within the corporate limits of the municipality.
For the purpose of the taxes enumerated in this section:
`Gross receipts' means the consideration received for the transmission of messages, * * * and for all services rendered in connection therewith valued in money, whether received in money or otherwise, including cash, credit, services and property of every kind and material and for all services rendered therewith, and shall be determined without any deduction on account of the cost of transmitting such messages, without any deduction on account of the cost of the service, product or commodity supplied, the cost of materials used, labor or service cost, or any other expenses whatsoever."
Pursuant to this statutory authority, the city enacted an ordinance which imposed a tax "upon all persons engaged in the business of transmitting messages by means of electricity at the rate of five per cent of the gross receipts from such business [originating within the city of Chicago]." (Chicago Municipal Code sec. 132-31 (1978).) The definition of "gross receipts" in the Chicago Municipal Code (Chicago Municipal Code sec. 132-30 (1978)) is, for our purposes here, identical to the definition contained in the statute.
Section 36(a) of the Public Utilities Act (Ill. Rev. Stat. 1977, ch. 111 2/3, par. 36(a)) provides:
"Whenever a municipality pursuant to Section 8-11-2 of the Illinois Municipal Code, as heretofore and hereafter amended, imposes a tax on any public utility, such utility may charge its customers, in addition to any rate authorized by this Act, an additional charge equal to the sum of (1) an amount equal to such municipal tax, or any part thereof, (2) 3% of such tax, or any part thereof, as the case may be, to cover costs of accounting, and (3) an amount equal to the increase in taxes and other payments to governmental bodies resulting from the amount of such additional charge. Such utility shall file with the Commission a true and correct copy of the municipal ordinance imposing such tax; and also shall file with the Commission a supplemental schedule applicable to such municipality which shall specify such additional charge and which shall become effective upon filing without further notice. Such additional charge shall be made by the addition of a uniform percentage to the amounts payable for intrastate utility service in such municipality and shall be shown separately on the utility bill to each customer. The Commission shall have power to investigate whether or not such supplemental schedule correctly specifies such additional charge, but shall have no power to suspend such supplemental schedule. If the Commission finds, after a hearing, that such supplemental schedule does not correctly specify such additional charge, it shall by order require a refund to the appropriate customers of the excess, if any, with interest, in such manner as it shall deem just and reasonable, and in and by such order shall require the utility to file an amended supplemental schedule corresponding to the finding and order of the Commission."
The term "gross receipts" upon which the 5% municipal tax is imposed has been construed by defendants to include not only customer billings for the transmission of messages originating within the city, but also all taxes assessed on those billings, including the municipal tax itself. For example, if a customer's pretax monthly bill were $10 (ignoring, for the sake of simplicity, the existence of Federal and State taxes), the amount upon which the municipal tax is imposed would not be $10, but $10.50. This results in a municipal tax of 52 1/2 cents, instead of 50 cents, plus a correspondingly larger amount withheld by Bell for its accounting costs.
Exhibits contained in the record show that, immediately following the enactment of the enabling legislation, representatives of the public utilities operating in Illinois met with personnel of the Illinois Commerce Commission and a formula was approved for the addition of a percentage to be added to the net (pretax) billings "in order for them [the utilities] to retain the same amount of dollars after the municipal tax is applied as before the tax was applied." These percentages, determined by means of an algebraic equation, are added to the billings and passed on to the customers. In this case they equal 6.5% of the customer's pretax bill.
In his complaint plaintiff alleged that defendant's computation of "gross receipts" to which the tax was applicable did not conform to the statutory definition of "gross receipts"; was capable of being compounded to infinity; was irrational, unreasonably burdensome, and oppressive; and deprived plaintiff of due process. Plaintiff also averred that the Illinois Commerce Commission had no power to adjudicate the validity and constitutionality of an ordinance or statute; that he was without an adequate remedy at law; and that the large number of Bell customers in Chicago, the common questions of law and fact, and the advantages of a single common judgment required that the suit be maintained as a class action. In his prayer for relief plaintiff sought a declaration that the part of the message tax constituting a tax on itself was illegal, invalid, and a violation of due process; he also asked that the circuit court temporarily and permanently enjoin defendants from collecting the alleged excess amounts, or, alternatively, that the court order the ...