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06/01/89 the Mutual Life Insurance v. John Washburn

June 1, 1989

THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, PLAINTIFF-APPELLANT

v.

JOHN WASHBURN, DIRECTOR OF INSURANCE, ET AL., DEFENDANTS-APPELLEES

IN REED

v.

BASCON (1988), 124 ILL. 2D 386, 393, 530 N.E.2D 417, 420, THE ILLINOIS SUPREME COURT RECENTLY REVIEWED THE STANDARDS FOR GRANTING SUMMARY JUDGMENTS:



APPELLATE COURT OF ILLINOIS, FOURTH DISTRICT

539 N.E.2d 1278, 183 Ill. App. 3d 978, 132 Ill. Dec. 472 1989.IL.819

Appeal from the Circuit Court of Sangamon County; the Hon. C. Joseph Cavanagh, Judge, presiding.

APPELLATE Judges:

JUSTICE SPITZ delivered the opinion of the court. McCULLOUGH, P.J., and KNECHT, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE SPITZ

This is an appeal by plaintiff the Mutual Life Insurance Company of New York , a life insurance company organized under the laws of the State of New York and authorized to do business and doing business in Illinois, from an order of the circuit court of Sangamon County granting summary judgment in favor of defendants John Washburn, Director of Insurance of the State of Illinois (Director), and James Donnewald, State Treasurer of the State of Illinois (Treasurer). The action was initiated by MONY pursuant to the State Officers and Employees Money Disposition Act (Act) (Ill. Rev. Stat. 1987, ch. 127, par. 170 et seq.) to contest the assessment of the foreign insurance company retaliatory tax for the year 1980 of $321,129.54 pursuant to section 444 of the Illinois Insurance Code (Ill. Rev. Stat. 1987, ch. 73, par. 1056). Plaintiff paid this sum under protest, and plaintiff's complaint sought a temporary restraining order, a preliminary injunction and a permanent injunction, each without bond, to: (1) restrain the Treasurer from transferring the monies out of the protest fund; (2) restrain the Director from depositing the monies into any fund other than the protest fund or disposing of the monies in any way other than as provided by the Act; and (3) restraining defendants from assessing against, imposing on, or collecting from plaintiff any tax, deficiencies, interest, or penalties connected with this matter and from taking any action to collect or recover from plaintiff the monies paid under protest. The complaint further prayed the court to declare the collection of the tax to be unwarranted and to order a refund of all monies paid under protest, plus interest.

On April 23, 1984, the Illinois Department of Insurance (Department) assessed plaintiff $234,401.12 as a retaliatory tax for the calendar year 1980, plus $86,728.42 interest thereon. Plaintiff paid the assessment under protest and obtained an injunction prohibiting the Treasurer from dispersing the funds pending a resolution of this action.

MONY was audited for the years 1980, 1981, and 1982 and was found by the Department to owe a retaliatory tax for 1980 only. At the time of the audit, the Department requested MONY to furnish it with New York's Franchise Tax Form CT 33, which would reflect the calculation of the New York tax against the substituted Illinois amounts for each of the years under audit. On April 12, 1984, MONY complied. However, the plaintiff objected to the application of the retaliatory tax against its experience "[unless] or until the Insurance Department can establish that Illinois domiciled insurers are more heavily burdened by the New York tax formula than they would be under Illinois law." The Department responded by submitting a letter and invoice for the retaliatory tax in 1980, stating "we feel that the State of New York, in certain instances, charges insurance companies a premium tax at the rate of 2.6% which is a rate higher than that of Illinois." Again MONY objected, on the basis of the 1981 decision of the Fourth District Appellate Court in Minnesota Mutual Life Insurance Co. v. O'Connor (1981), 98 Ill. App. 3d 1040, 425 N.E.2d 38, contending the Illinois retaliatory tax could only be invoked against New York insurers after a determination had been made of the impact of New York taxes on actual insurers domiciled in Illinois. Subsequently, the Department's legal staff reviewed this matter and explained that where the Minnesota Mutual case involved only one method utilized by a foreign State to assess privilege taxes against Illinois companies, New York employs seven or eight different methods. Therefore, the Department examines the business experience of each New York insurer to ascertain which of the New York tax computation methods is to be applied and then computes the retaliatory tax by applying the New York calculation method employed to the company's Illinois business experience for the given tax year. For this reason, some, but not all, New York companies pay a retaliatory tax, although all are subject to it.

On April 10, 1986, MONY paid the assessment under protest and thereafter commenced this action challenging the Department's interpretation of the retaliatory act. Upon cross-motions for summary judgment and after extensive briefing and oral argument, the circuit court found there was no genuine issue of material fact and entered summary judgment for the defendants. The trial court specifically found:

"The State of New York imposes a tax on Illinois insurance companies, when stripped of all its apparent complexities, of as much as 2.6 percent of gross premiums; whereas Illinois imposes a tax of not more than 2 percent of gross premiums."

The trial court's findings were entered on July 20, 1988, as a docket entry, with the special assistant Attorney General to prepare a written order. The written order was entered on July 29, 1988. On August 26, 1988, MONY filed a motion to vacate judgment and reopen the record. At the hearing on the motion, the record was reopened and MONY was allowed to file a copy of plaintiff's 1980 IL 1120 and copies of estimated 1980 privilege tax returns. Following the hearing held on October 24, 1988, the motion to vacate was denied.

"Section 2-1005(c) of the Civil Practice Law (Ill. Rev. Stat. 1985, ch. 110, par. 2-1005(c)) provides that summary judgment shall be granted 'if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.' Although summary judgment is to be encouraged as an aid in the expeditious Disposition of a lawsuit (Allen v. Meyer (1958), 14 Ill. 2d 284, 292), it is a drastic measure and, therefore, should be allowed only when the right of the moving party is free from doubt (Purtill v. Hess (1986), 111 Ill. 2d 229, 240; Beverly Bank v. Alsip Bank (1982), 106 Ill. App. 3d 1012, 1016). The court must construe the pleadings, depositions, admissions, exhibits, and affidavits on file strictly against the movant in determining whether a genuine issue of material fact exists. Kolakowski v. Voris (1980), 83 Ill. 2d 388, 398."

The trial court is not obliged to enter summary judgment just because the parties file cross-motions for summary judgment alleging there exists no genuine issue of material fact. Haberer v. Village of Sauget (1987), 158 Ill. App. 3d 313, 511 N.E.2d 805.

In this case, the facts are undisputed. The determination by the trial court required the construction of the statutes and their application to the facts. Since the matter before the trial court could be determined as a question of law, this was a proper case in which to enter a summary judgment. See Lewis ...


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