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Edward Don & Co. v. Zagel

OPINION FILED APRIL 13, 1981.

EDWARD DON & COMPANY ET AL., PLAINTIFFS-APPELLANTS,

v.

JAMES B. ZAGEL, DIRECTOR OF THE DEPARTMENT OF REVENUE, ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Cook County; the Hon. JOHN F. HECHINGER, Judge, presiding.

MR. PRESIDING JUSTICE GOLDBERG DELIVERED THE OPINION OF THE COURT:

Edward Don & Company, Restaurant Enterprises, Inc., and Sizzler Family Steak Houses of West Suburban Chicago, Inc. (plaintiffs), brought this class action seeking a declaratory judgment concerning the application of the Regional Transportation Authority Retailers' Occupation Tax (Ill. Rev. Stat. 1979, ch. 111 2/3, par. 704.03(e)). On motion of defendants, the trial court dismissed the complaint as insufficient in law. Plaintiffs appeal.

The 1979 amendments to the Regional Transportation Authority Act (Ill. Rev. Stat. 1979, ch. 111 2/3, par. 701.01 et seq.) authorized the defendant Regional Transportation Authority (RTA) to impose retailers' occupation, service occupation and use taxes in the Chicago metropolitan area. Section 704.03(e) of the RTA Act (Ill. Rev. Stat. 1979, ch. 111 2/3, par. 704.03(e)) provides in part:

"The Board may impose a Regional Transportation Authority Retailers' Occupation Tax upon all persons engaged in the business of selling tangible personal property at retail in the metropolitan region at a rate not to exceed 1% of the gross receipts from such sales made in the course of such business within the County of Cook and 1/4% of the gross receipts from such sales made in the course of such business within the Counties of DuPage, Kane, Lake, McHenry and Will."

Pursuant to this authority, on September 24, 1979, the RTA adopted ordinances establishing retailers' occupation, service occupation and use taxes in the six-county metropolitan region.

Defendant Jerome Cosentino is the Treasurer of the State of Illinois. Defendant James B. Zagel is the Director of the Department of Revenue of the State of Illinois, which is the administrative agency responsible for collecting and distributing the RTA taxes. Zagel instructed plaintiffs that applicability of the RTA Retailers' Occupation Tax depends on the location of the retailer's business rather than the place where title to goods sold is transferred. Rules codifying that instruction were issued by the Department of Revenue, effective July 1, 1980. See Illinois Department of Revenue RTA Retailers' Occupation Tax Rule No. 4.3,

1 State Tax Rep. — Illinois (CCH) par. 64-074.

Plaintiff Edward Don & Company is a business located in Cook County. It sells tangible personal property at retail to customers in Cook County, in the five metropolitan counties other than Cook (known as the "collar counties") and in counties other than Cook or the collar counties (known as the "downstate counties"). Plaintiff Restaurant Enterprises, Inc., is a business located outside of Cook County and the collar counties which buys tangible personal property from Edward Don & Company. Plaintiff Sizzler Family Steak Houses of West Suburban Chicago, Inc., is a business located in the collar counties which purchases tangible personal property from Edward Don & Company.

On January 17, 1980, plaintiffs filed suit seeking a declaratory judgment that the applicability of the RTA Retailers' Occupation Tax to a sales transaction depends on the place where title to the goods sold is transferred. The complaint also sought various refunds from defendants of taxes heretofore paid.

It is plaintiffs' initial argument that the applicability of the RTA Retailers' Occupation Tax (Ill. Rev. Stat. 1979, ch. 111 2/3, par. 704.03(e)) should depend on where title to goods sold is transferred, and not on the location of the business of the retailer. Such an interpretation, plaintiffs urge, is in accordance with the plain meaning of the statute.

We disagree. The RTA Retailers' Occupation Tax (Ill. Rev. Stat. 1979, ch. 111 2/3, par. 704.03(e)) authorizes the tax to be applied "at a rate not to exceed 1% of the gross receipts from such sales made in the course of such business within the County of Cook and 1/4% of the gross receipts from such sales made in the course of such business within the Counties of DuPage, Kane, Lake, McHenry and Will." (Emphasis added.)

• 1 As noted by defendants, the interpretation of this language proposed by plaintiffs would violate the "last antecedent" rule of statutory construction. "Under this doctrine, relative or qualifying words or phrases modify words or phrases which are immediately preceding and do not modify those which are more remote." (City of Mount Carmel v. Partee (1979), 74 Ill.2d 371, 375, 385 N.E.2d 687.) Pursuant to this precept, the phrases "within the County of Cook" and "within the [collar counties]" must be said to modify the immediately preceding antecedent phrase "in the course of such business." We believe this interpretation of the statute is natural, obvious, and well in accordance with the plain meaning of the language. To accept the interpretation proffered by plaintiffs would be to alter the plain meaning of the statute, which should not be done by a court of review. People ex rel. Pauling v. Misevic (1964), 32 Ill.2d 11, 15, 203 N.E.2d 393, cert. denied (1965), 380 U.S. 963, 14 L.Ed.2d 154, 85 S.Ct. 1107; In re Estate of Howard (1978), 67 Ill. App.3d 595, 597, 385 N.E.2d 120.

• 2 We also note the interpretation suggested by plaintiffs of the statute would have us, in effect, excise the phrases "made in the course of such business" in order to allow the phrases "within the County of Cook" and "within the [collar counties]" to modify "such sales." (Ill. Rev. Stat. 1979, ch. 111 2/3, par. 704.03(e).) Such an action would also be in violation of long-standing rules of statutory interpretation. "A statute should be so construed, if possible, that no word, clause or sentence is rendered meaningless or superfluous." People v. Lutz (1978), 73 Ill.2d 204, 212, 383 N.E.2d 171.

In addition, in construing taxation statutes, "the policy of [the Illinois Supreme Court] has been to give them a common sense meaning so as to avoid making collection difficult or impossible." (Department of Revenue v. Joseph Bublick & Sons, Inc. (1977), 68 Ill.2d 568, 575, 369 N.E.2d 1279.) A collection system based upon the location of a retailers' business clearly presents fewer inherent difficulties than would occur if the tax depended on location of the place where transfer of title occurred. As noted by defendants, in many circumstances the Uniform Commercial Code permits the location of the transfer of title to goods to be subject to "any conditions explicitly agreed on by the parties." (Ill. Rev. Stat. 1979, ch. 26, par. 2-401(1).) We do not believe it ...


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