APPEAL from the Circuit Court of Cook County; the Hon. EARL
ARKISS, Judge, presiding.
MR. JUSTICE LINN DELIVERED THE OPINION OF THE COURT:
Defendant, Edward Rosewell, in his position as county collector, appeals from an order entered in the circuit court of Cook County permanently enjoining him from collecting approximately $700,000 in 1978 real estate taxes allegedly owed by plaintiff, First National Bank and Trust Company of Evanston, the legal title holder of improved business property in Evanston. Plaintiff cross-appeals from a judgment entered in favor of defendants Harry Semrow and Seymour Zaban, in their positions as Commissioners of the Board of (Tax) Appeals, on a civil rights claim for damages and injunctive relief brought by plaintiff under 42 U.S.C. § 1983 (1976).
Plaintiff holds legal title to improved business property in Evanston in a land trust for a limited partnership known as American Plaza Associates (hereinafter the partnership). In October 1977, the partnership completed construction on the property of an 18-story office building. This office building was the sole income producing asset of the partnership. Following the completion of the building, the partnership began the process of renting space in the building. By the end of 1978, the building was only partially occupied. In the middle of 1978, the partnership received notice from defendant Thomas Hynes, in his position as county assessor, that the assessed value of the property for 1978 had been determined to be approximately $8 million. This represented a fair cash value of the property of approximately $20 million since the applicable assessment rate was 40 percent. The $8 million assessment was an increase of $6 million over the 1977 assessed value of $2 million.
After receiving the notice, the partnership filed a complaint with the assessor seeking a decrease in the 1978 assessment to $3.1 million. In its complaint, the partnership alleged that the building on the property had cost $17 million to construct and even under a replacement cost approach the $8 million assessment representing a $20 million fair cash value was excessive. The partnership pointed out that the office building was only in its first year of operation, that it had only been partially rented, and that the estimated gross income the partnership would receive from the property in 1978 was approximately $3 million. The partnership requested that the assessor take into consideration the problem of renting the building in its first year, and requested that the assessor use primarily an income capitalization approach to determine the fair cash value of the property. This request was based on guidelines used by the assessor and known to the partnership as being applicable to income producing property. After taking certain deductions from gross income usually allowed by the assessor for determining the figure to be capitalized, the partnership contended that the fair cash value of the property based on an income capitalization approach was a little less than $8 million and the assessed value for 1978 should be $3.1 million.
After being supplied with necessary documentation, the assessor's employee in charge of handling the complaint agreed with the partnership that the income capitalization approach should be given primary consideration, but disagreed with some of the figures supplied by the partnership. The employee determined that the fair cash value for the property should be set at approximately $8.5 million with an assessed value of $3.4 million. The employee, after receiving authorization, told the partnership that he would change the assessor's rolls to show an assessed value for 1978 of $3.4 million. The employee also told the partnership that this assessed value would apply for 1978 only and the property would be reassessed in 1979 when the income from the property would probably be higher.
The assessor's decision to lower the 1978 assessed value to $3.4 million was made in early November 1978. After the decision was made, it was discovered that the assessor's rolls for 1978 for Evanston had already been certified to the Board of Appeals. Once certified, assessed values can only be changed by the Board of Appeals. The assessor's employee told the partnership what had occurred and suggested that the partnership could pursue either of two statutory methods for getting the assessment changed. The employee said that the assessor could certify a mistake to the Board (see Ill. Rev. Stat. 1979, ch. 120, pars. 594(2), 603), or the partnership could file a complaint with the Board and the assessor would file a recommendation that the assessed value be changed to $3.4 million (see Ill. Rev. Stat. 1979, ch. 120, par. 594(1)).
The partnership chose the latter course and, in late November 1978, it filed a complaint with the Board requesting a decrease in the assessment to $3.1 million. The assessor filed a recommendation that the assessed value be changed to $3.4 million. Thereafter, without explanation, the Board of Appeals, consisting of Commissioners Semrow and Zaban, dismissed the complaint and left the assessed value at $8 million.
In 1979, when the 1978 real estate taxes became due, the partnership paid approximately $600,000 in real estate taxes, the amount it would have owed if the $3.4 million assessment recommended by the assessor had been accepted by the Board. The partnership refused to pay an additional $800,000 in taxes allegedly owed based on the $8 million assessment. Instead, the partnership (through plaintiff) brought the present three-count action in the circuit court of Cook County.
In count I, the partnership sought a permanent injunction against defendant Rosewell to prevent him from collecting the additional $800,000 in taxes and any penalties or interest owed on the amount because of the partnership's failure to pay the taxes on time. The partnership alleged that the $8 million assessment was constructively fraudulent because it was almost 2 1/2 times the assessment determined by the assessor himself to be correct and because the Board of Appeals had failed to apply any known standards to determine that the $8 million assessment was correct. The partnership alleged that its remedy at law, to pay the taxes under protest and then file its objections in court when the collector filed his application for judgment (see Ill. Rev. Stat. 1979, ch. 120, pars. 675, 716), was inadequate. The partnership pointed out that it did not have the assets to pay the additional taxes because the partnership's sole source of income was the office building, and it did not have the cash on hand to pay the additional taxes since its total net income from the first year of operation was less than the amount of the taxes. The partnership admitted that it could borrow the amount necessary to pay the tax but contended it would have to pay 13.5 percent per year in interest (the prime rate at the time the complaint was filed). The partnership alleged that, on the average, it takes two years for an improper tax to be returned to the taxpayer, and thus it would cost the partnership approximately $200,000 to pursue its legal remedy since no interest is paid by the collector on amounts refunded to taxpayers. The partnership asserted that it was unreasonable to require it to pursue its legal remedy in the circumstances of this case and injunctive relief should be granted.
In count II, the partnership sought legal and equitable relief under 42 U.S.C. § 1983 (1976). The partnership alleged that the Board's arbitrary determination to leave the assessment at $8 million denied it equal protection of the laws under the Fourteenth Amendment to the United States Constitution. The partnership sought damages of $100,000 from Commissioners Semrow and Zaban for depriving it of its constitutional right and sought an injunction against defendant Rosewell to prevent him from collecting the additional taxes.
In count III, the partnership requested that a writ of certiorari be issued to the Board of Appeals, that the proceedings in which the Board determined that the $8 million assessment was correct be quashed, and that an injunction be issued to prevent Rosewell from collecting the additional taxes.
The defendants answered the complaint denying all of the essential allegations except that defendant Thomas Hynes, in his position as county assessor, admitted that the $8 million assessment was incorrect and admitted that the assessor had recommended a $3.4 million assessment. The assessor asserted, however, that upon further review of the information it had on file (some of it supplied by the partnership after the complaint was filed), the assessor believed that the proper assessed value of the property for 1978 should have been approximately $4.3 million.
The case went to trial. During plaintiff's case-in-chief various documents and testimony were presented to show that the partnership had a gross income of approximately $3 million in 1978 and that, after expenses, it did not have the cash on hand to pay the taxes. Plaintiff called various witnesses, among whom were employees of the assessor's office who had worked on plaintiff's file. These employees explained that the assessor uses three basic methods to determine the fair cash value of property: the market approach, the income capitalization approach and the replacement cost approach. The employees explained that the assessor had established various standards to be followed in ...