Appeal from the Appellate Court for the First District; heard
in that court on appeal from the Circuit Court of Cook County,
the Hon. David S. Shields, Judge, presiding.
JUSTICE MILLER DELIVERED THE OPINION OF THE COURT:
The plaintiffs, Ron Freund and Kathleen Z. Fennell, brought this action in the circuit court of Cook County to recover allegedly excessive amounts of taxes that had been collected from rental car customers by defendants Avis Rent-A-Car, Inc., and Hertz Corporation. The trial judge dismissed the complaint for failure to state a cause of action. The appellate court affirmed that decision (139 Ill. App.3d 11), and we allowed the plaintiffs' petition for leave to appeal (103 Ill.2d R. 315(a)).
The plaintiffs commenced their action on October 6, 1982. They alleged in their complaint that they had rented cars from Avis and Hertz offices located in Chicago and that the companies had inaccurately calculated several State and local taxes, resulting in slight overcharges. Named as defendants in the complaint, in addition to the two rental companies, were the State Treasurer and the Director of the Illinois Department of Revenue, who are responsible for administering the State taxes involved here, and the city of Chicago. The plaintiffs sought to recover the amounts in question in their own behalf and on behalf of similarly situated classes of persons.
In count I of the complaint plaintiff Ron Freund alleged that he rented a car from Avis on October 1, 1982. He signed a rental agreement, agreeing to pay $18 a day for the rental of the car; he also elected the collision-damage waiver, at a cost of $5.50 a day. Freund returned the car two days later, and the form was completed at that time. According to the complaint, the form showed a total charge of $56.92, computed in the following manner:
"Automobile Rental (2 days) $36.00 Collision Damage Waiver (2 days) 11.00 ______ Sub Total $47.00 Tax, at 11% 5.17 Refueling Service 4.75 ______ Net Amount Due $56.92"
Freund alleged that Avis erred by including the cost of the collision-damage waiver in the base on which the taxes were calculated. According to Freund, the taxes should have been imposed on the rental charge alone, and the correct amount therefore would have been 11% of $36 rather than 11% of $47, which would have resulted in taxes $1.21 less than what he had paid.
Plaintiff Fennell, in count II of the complaint, made similar allegations against Hertz. Fennell rented her car on September 24, 1982, and signed a rental agreement, agreeing to pay a rental charge of $49 a day for the car; she also elected the collision-damage waiver, at a daily cost of $6. Fennell returned the car the next day, and the rental form was completed at that time. According to the complaint, the form showed a total charge of $72.19, computed in the following manner:
"Auto Rental (1 day) $49.00 `Rental Tax, 6%' 2.94 `Refueling Service' 8.23 Collision Damage Waiver (1 day) 6.00 ______ Sub-Total $66.17 City of Chicago Transactions Tax, Effective Rate 5.7% 3.77 Personal Accident Insurance 2.25 ______ Net Amount Due: $72.19"
Fennell alleged that there were two errors in the computation of the bill: the rate for the first tax computation shown on the form should have been 5% rather than 6%, and the base on which the Chicago transaction tax was calculated should not have included the costs of the collision-damage waiver or the refueling service. Like Freund, Fennell contended that the taxes should have been computed on the rental charge alone, and therefore the correct amount in her case would have been 11% of $49, which would have resulted in taxes $1.32 less than what she had paid.
There were three taxes involved here: (1) a tax of 4% assessed under the Automobile Renting Occupation and Use Tax Act (Ill. Rev. Stat. 1981, ch. 120, pars. 1701 through 1704), (2) a tax of 1% authorized by the Municipal Automobile Renting Occupation Tax Act (Ill. Rev. Stat. 1981, ch. 24, par. 8-11-7) and imposed by ordinance (Chicago Municipal Code secs. 132-49 through 132-50 (1983)), and (3) a 6% Chicago transaction tax, imposed by ordinance (Chicago Municipal Code secs. 200.1 through 200.1-11 (1983)). In essence, Freund contended that Avis should not have included the collision-damage waiver in the computation of any of the three taxes. Fennell argued that Hertz should have assessed the first two taxes at a combined rate of 5% rather than 6% and that the company should not have included the costs of the collision-damage waiver and refueling service in the computation of the city transaction tax. It should be noted in Fennell's case that an effective rate of 5.7% was given for the city's transaction tax; the effect of computing the tax at the lower rate was to eliminate the amount of State tax included in the base, thus preventing the imposition of a tax on a tax.
The trial court dismissed the action under the voluntary-payment doctrine, finding that the plaintiffs had paid the amounts in question without protest and that the rental agreements, which listed the amounts of the various charges, contained sufficient information from which the plaintiffs could have determined to protest the charges. Following the dismissal of the complaint, the plaintiffs filed an amendment to the complaint in which they made further allegations of their lack of knowledge of the overcharges and their inability to determine the alleged errors from the face of the forms. The complaint as amended also was dismissed. For a time the plaintiffs' action had been consolidated with two others involving similar claims, but the other actions eventually were settled, and the consolidation order was vacated.
The appellate court affirmed the dismissal of the action, holding that the voluntary-payment doctrine precluded the plaintiffs from bringing the action. The court rejected the plaintiffs' principal argument that they could not have known, from the information contained in the rental forms, the methods by which the various charges were calculated. In the appellate court the plaintiffs made a number of other arguments against the dismissal of their action, but those contentions also failed, and they are not raised in this court. Moreover, it should be noted that although the appellate court agreed with the plaintiffs that the taxes had been calculated incorrectly, the rental companies observe that they have not conceded the impropriety of including charges for the collision-damage waiver and refueling service in the base of one of the taxes here, the 6% Chicago transaction tax. We note further that the propriety of the bases on which the taxes were calculated has not been made an issue at this stage of the proceedings.
The voluntary-payment doctrine has been expressed in the following terms:
"It has been a universally recognized rule that money voluntarily paid under a claim of right to the payment and with knowledge of the facts by the person making the payment cannot be recovered back on the ground that the claim was illegal. It has been deemed necessary not only to show that the claim asserted was unlawful, but also that the payment was not voluntary; that there was some necessity which amounted to compulsion, and payment was made under the influence of such compulsion." (Illinois Glass Co. v. Chicago Telephone Co. (1908), 234 Ill. 535, 541.)
As a general matter, taxes paid voluntarily, though erroneously, may not be recovered without statutory authorization. (Getto v. City of Chicago (1981), 86 Ill.2d 39, 48; Hagerty v. General Motors Corp. (1974), 59 Ill.2d 52, 59.) The rule is applicable to payments made to an intermediary (Adams v. Jewel Cos. (1976), 63 Ill.2d 336, 343-44; Hagerty v. General Motors Corp. (1974), 59 Ill.2d 52, 59-60), and there is no contention here that the rental companies retained the disputed amounts and were unjustly enriched by them. Instead, the plaintiffs argue that their payments were not voluntary, and although no protests were made at the time of payment to signify opposition to the charges and forestall a finding of voluntariness (see Isenstein v. Rosewell (1985), 106 Ill.2d 301, 309), the plaintiffs ...