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03/10/88 A & H Vending Service, Inc v. the Village of Schaumburg

March 10, 1988




APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FOURTH DIVISION

A & H VENDING SERVICE, INC., et al., Plaintiffs-Appellants, v. THE VILLAGE OF SCHAUMBURG, Defendant-Appellee

522 N.E.2d 188, 168 Ill. App. 3d 61, 118 Ill. Dec. 733 1988.IL.342

Appeal from the Circuit Court of Cook County; the Hon. George A. Higgins, Judge, presiding.

APPELLATE Judges:

PRESIDING JUSTICE JIGANTI delivered the opinion of the court. JOHNSON and McMORROW, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE JIGANTI

The plaintiffs, operators and owners of coin-operated vending machines which dispense food, beverages, and other commodities, sought an injunction restraining the defendant, the Village of Schaumburg, from enforcing the provisions of its vending-machine licensing ordinances. It also sought a refund of all moneys for licensing fees paid on or after January 1, 1975. The plaintiffs claimed that the ordinances violated the powers granted to home rule units under article VII, section 6, of the Illinois Constitution. (Ill. Const. 1970, art. VII, § 6.) The trial court granted the village's motion for judgment at the close of the plaintiffs' case and dismissed the action. The plaintiffs appeal.

The Village of Schaumburg is a home rule municipality located in Cook County. The vending-machine licensing ordinances set forth regulations, requirements, procedures, and the annual fees for the operation of vending machines in the village. The license fees set by the ordinances range from $2 for machines using a penny to $100 for machines using $1 or more.

Article VII of the Constitution is entitled "Local Government." Section 6 in pertinent part provides:

"Powers of Home Rule Units

(a) . . . Except as limited by this Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs including, but not limited to, the power to regulate for the protection of the public health, safety, morals and welfare; to license; to tax ; and to incur debt.

(e) A home rule unit shall have only the power that the General Assembly may provide by law . . . (2) to license for revenue or impose taxes upon or measured by income or earnings or upon occupations." (Emphasis added.) (Ill. Const. 1970 art. VII, §§ 6(a), (e).)

The plaintiffs maintain that by enacting these ordinances, the village has imposed, in the guise of regulatory license, what is in fact licensing as a revenue measure, which is prohibited under section 6(e). The village contends that under section 6(a) this is a proper exercise of both its power to regulate for public health, safety, morals and welfare as well as its power to tax. The village further contends that even if the license is to be construed as a license for revenue, the ordinance is still valid under section 6(e) because the legislature has in fact given the village the statutory power to impose such a license fee. We believe the ordinance comes within the village's power to regulate for public health, safety, morals and welfare under section 6(a) and sustain the license fee on that basis. For that reason it is unnecessary to address the village's other contentions that the license fee can also be sustained as a tax measure under section 6(a) and as licensing for revenue pursuant to legislative authority under section 6(e).

Initially, it should be noted that the Illinois courts have not clearly defined what is meant by the power to license. As a result, the difference between licensing for the purposes of regulation and licensing for the purposes of raising revenue is not clear. An attempt to distill from the cases what is meant by the power to license leads to the following Conclusions. When a governmental entity has been granted the power to license and regulate but not the power to tax, the Illinois courts have held that the license fee must be reasonably related to the cost of regulation. (Arends v. Police Pension Fund (1955), 7 Ill. 2d 250, 253, 130 N.E.2d 517, 519.) However, when the power to license and regulate is combined with the power to tax, the courts have upheld license fees geared to producing revenue. (Village of East Alton v. Arst (1944), 386 Ill. 224, 53 N.E.2d 929.) When the power to license is combined with the power to tax, the license fees do not have to be reasonably related to the cost of regulation. The term "license for ...


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