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Schlessinger v. Olsen

OPINION FILED SEPTEMBER 30, 1980.

SHIRLEY SCHLESSINGER ET AL., PLAINTIFFS-APPELLANTS,

v.

SIDNEY R. OLSEN, COOK COUNTY RECORDER OF DEEDS AND REGISTRAR OF TITLES, ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Cook County; the Hon. RAYMOND K. BERG, Judge, presiding.

MR. JUSTICE STAMOS DELIVERED THE OPINION OF THE COURT:

This appeal is concerned with the constitutionality of the Real Estate Transfer Tax Act (Ill. Rev. Stat., 1978 Supp., ch. 120, par. 1003), which imposes a State tax on the transfer of real estate and allows the county to retain 50 percent of the collection as a "distribution of the tax." Plaintiffs, both individually and as representatives of a class, brought an action in the circuit court against defendants Sidney R. Olsen, Edward Rosewell, and the County of Cook, challenging the statute on several constitutional grounds. The complaint, styled in six counts, charged that the statute violated the Illinois Constitution. Plaintiffs cite the provisions pertaining to appropriation bills, legislative expenditures, and fee officers. Plaintiffs moved to enjoin defendants from commingling the taxes collected under the questioned statute with any other funds and for certification of the class action. During the pendency of this motion, a bill was introduced in the Illinois General Assembly to amend the questioned statute. Plaintiffs thereafter moved the trial court to expedite hearing on the preliminary injunction. The court found the statute constitutionally defective, violating the provisions prohibiting fee officers and mandating legislative apportionment prior to expenditures. The order also recited that the "action was properly brought as a class action taxpayers' suit on behalf of all Illinois taxpayers." Three other explicit references to the trial court's finding of applicability of the class action vehicle, entered pursuant to the provisions of the Civil Practice Act (Ill. Rev. Stat. 1977, ch. 110, par. 57.2), were contained in the original draft, but were struck from the signed order.

Following the order providing for a preliminary injunction, plaintiffs made another motion for class action determination. The motion stated that the trial court had initially decided to certify the class action but had subsequently postponed its decision based upon oral representations by defense counsel concerning adequacy of representation by counsel then employed by plaintiffs. Defendants countered with a motion requesting the trial court to reconsider their previous motion to strike the complaint. Defendants also filed a response to plaintiff's motion for class certification. This response maintained that certification would be premature prior to discovery or the filing of an answer. The trial court denied the motion for a determination of the propriety of the class action and, at a later hearing, reversed and remanded its prior order granting the injunction, finding that the statute did not violate the cited constitutional provisions. Accordingly, the trial court also granted defendant's motion to dismiss plaintiff's complaint. Plaintiffs took an appeal from this order.

The real estate transfer tax statute at issue here (Ill. Rev. Stat., 1978 Supp., ch. 120, par. 1003) (Statute II) was enacted concomitant to a similar, eventually successful, attack on the prior real estate transfer tax statute. (Ill. Rev. Stat. 1975, ch. 120, par. 1003) (Statute I). See Saltiel v. Olsen (1979), 77 Ill.2d 23, 394 N.E.2d 1197.) Statute II imposes a State tax on the privilege of transferring title to real estate. The tax is collected as an incident of the filing of the deed for recordation *fn1 and is assessed at the rate of 50 cents on each $500 of value unless the real estate is transferred subject to a mortgage. In that event, only the unmortgaged portion of the transferred property is subject to the tax.

The statute further provides that the method of collection is through the sale of revenue stamps by the recorder of deeds or registrar of titles. The form denomination, and design of these stamps are provided for by the State Department of Revenue. After the Department of Revenue sells these stamps to the local recorder of deeds or registrar of titles, this local official resells the stamps to those recording deeds or registering titles.

The Department, however, charges the local official only 25 cents per $500 of value instead of the full amount of the State tax assessed (50 cents per $500). The Department then places the proceeds from the sale of revenue stamps in the general revenue fund of the State treasury. The local official is allowed to retain the "net proceeds," i.e., the unremitted 25 cents per $500, as a "distribution of the tax" authorized by the statute.

Statute II also provides that the local official may use the retained proceeds from the sale of the stamps to purchase additional stamps from the Department. It directs county boards to allocate money to the recorder of deeds to enable the local official to purchase stamps from the Department in the interim between the enactment of the statute and the collection of "fees [by] the recorder of deeds or registrar of titles" sufficient to provide for future stamp purchases.

Statute I, declared unconstitutional by the Illinois Supreme Court in Saltiel v. Olsen, paralleled Statute II except that it provided:

"The net proceeds from such sale by the recorder of deeds or registrar of titles shall be treated as a fee of his office." (Emphasis added.) Ill. Rev. Stat. 1975, ch. 120, par. 1003.

Following the successful challenge to the statute in Saltiel premised on the violation of the constitutional prohibition of fee officers, that portion of the statute which contained the words "a fee of his office" was amended in Statute II, which provides:

"The net proceeds from such sale by the recorder of deeds or registrar of titles shall be treated as the distribution of the tax which is herein authorized to be charged and collected." (Emphasis added.) (Ill. Rev. Stat., 1978 Supp., ch. 120, par. 1003.)

The present challenge to Statute II pertains to the amended portion of the provision.

Count I of the complaint was brought by plaintiff Schlessinger on behalf of herself and all other similarly situated persons. Count II was brought by plaintiffs Schlessinger and Kern on their behalf and as representatives of all other similarly situated persons. Both counts I and II allege that Statute II violates the provision of the Illinois Constitution which requires specific appropriations from the General Assembly for all expenditures. The Constitution provides in relevant part:

"The General Assembly by law shall make appropriations for all expenditures of public funds by the State." (Ill. Const. ...


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