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Canel v. Topinka

October 7, 2004

JAMES H. CANEL, APPELLEE,
v.
JUDY BAAR TOPINKA ET AL., APPELLANTS.



The opinion of the court was delivered by: Justice Freeman

PUBLISHED

Docket No. 96755-Agenda 13-May 2004.

In this appeal, defendants argue that, pursuant to section 15 of the Uniform Disposition of Unclaimed Property Act (765 ILCS 1025/15 (West 1998)), the state is entitled to retain dividends issued on shares of stock which were presumed abandoned and delivered to the state. Plaintiff argues the dividends are private property which must be returned to the property owner along with the shares of stock. The appellate court determined that the dividends were the private property of plaintiff, and remanded to the circuit court of Cook County for a determination of just compensation. 342 Ill. App. 3d 65. This appeal followed. 134 Ill. 2d R. 317.

BACKGROUND

Plaintiff, James H. Canel, was the owner of 288 shares of stock of Patrick Industries, Inc. Harris Bank was the holder of the stock, as defined in the Uniform Disposition of Unclaimed Property Act (Act) (765 ILCS 1025/1 et seq. (West 1998), now 765 ILCS 1025/0.05 et seq. (West 2002)). In December 1998, Harris Bank delivered the stock to defendant Mitchell Murdock, the Director of Financial Institutions, as property presumed abandoned under the Act. See 765 ILCS 1025/11 (West 1998).*fn1 Defendant Murdock is presently the director of the Unclaimed Property Division of the office of the Treasurer of the State of Illinois.

Plaintiff learned of the remittance of the stock to the Department of Financial Institutions in January 1999. Thereafter, on April 9, 1999, plaintiff submitted a claim to defendant Murdock for the return of the stock along with any dividends or other accruals that had been issued during the time the Department of Financial Institutions held the stock. On August 31, 1999, plaintiff completed a form prescribed by the State Treasurer, defendant Judy Baar Topinka, for the return of his property. The Treasurer returned the stock, but refused to return the dividends issued on the stock.*fn2

On September 11, 2000, plaintiff filed a class action on behalf of himself and others similarly situated. In the complaint, plaintiff described defendant Topinka as being charged with supervising and administering the Unclaimed Property Division of the office of the Illinois Treasurer. Plaintiff alleged that defendant Murdock is charged with administering the Unclaimed Property Division, including disposition of all property that is remitted to the Division and payment of all approved claims for return of such property. All counts of the complaint pertained to both defendants.

Plaintiff alleged that numerous persons and entities own private property deemed abandoned and held by the Treasurer as custodian. Plaintiff further alleged that it is defendants' policy and practice not to return dividends, interest and accruals earned on the property to the property owners upon application. Instead, defendants retain the dividends, interest and accruals earned on the property for use by the state. In count I of the complaint, plaintiff maintained that by retaining the dividends, interest and other accruals earned on the property and using them for state purposes, defendants violate article I, section 15, of the Constitution of 1970 (Ill. Const. 1970, art. I, §15), which prohibits the taking of private property without payment of just compensation. In count II of the complaint, plaintiff maintained that defendants' policy and practice of retaining the accruals earned on the property violate the prohibition of the fifth amendment to the United States Constitution, made applicable to the states by the fourteenth amendment, that private property may not be taken for public use without just compensation. U.S. Const. amends. V, XIV. Plaintiff also claimed a violation of 42 U.S.C. §1983.

On November 20, 2000, defendants filed a motion to dismiss the complaint pursuant to section 2-619.1 of the Code of Civil Procedure (735 ILCS 5/2-619.1 (West 2000)). In this combined motion to dismiss, defendants stated grounds for dismissal under both section 2-615 (735 ILCS 5/2-615 (West 2000)) and section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 2000)). As grounds for dismissal pursuant to section 2-615, defendants maintained that plaintiff failed to meet the necessary prerequisites for a class action; that plaintiff failed to state a claim for violation of his constitutional rights; and that plaintiff, having failed to exhaust the state administrative review process, could not show a violation of 42 U.S.C. §1983. In support of the claim that plaintiff failed to show a constitutional violation, defendants argued that, pursuant to section 15 of the Act, a property "owner is not entitled to receive income or other increments accruing" after the property is delivered to the state. 765 ILCS 1025/15 (West 1998). As grounds for dismissal under section 2-619, defendants maintained that plaintiff failed to show the existence of a present case or controversy because the shares of stock had been returned to him; and that plaintiff's claims were barred pursuant to the doctrine of sovereign immunity. In reply, plaintiff argued, inter alia, that there was a justiciable controversy because defendants refused to return the earnings on the shares of stock. Plaintiff also argued that two exceptions to the exhaustion doctrine applied: first, a party need not exhaust his administrative remedies when he attacks the constitutionality of a statute on its face; and second, a party need not exhaust his administrative remedies where it is patently futile to do so.

The circuit court found the motion to dismiss to be well founded and granted the motion. The court reasoned:

"I think you needed to pursue administrative review, and you didn't. You weren't deprived of the remedy. And any residual claims that you address in your complaint appears to be claims that would have to be pursued in a court of claims. You haven't been deprived of the process in the face of things."

The appellate court reversed and remanded. 342 Ill. App. 3d 65. The court noted that at oral argument defendants conceded plaintiff was not required to exhaust his administrative remedies or seek relief in the Court of Claims. 342 Ill. App. 3d at 68. The court further noted that plaintiff acknowledged he had not appealed from the dismissal of count III of the complaint. 342 Ill. App. 3d at 68 n.1. The court then determined that section 15 of the Act is not an escheat law. 342 Ill. App. 3d at 72. Consequently, the state could not use its powers of escheat as a basis for retaining the dividends at issue. 342 Ill. App. 3d at 72. The court also found that the shares of stock and the dividends earned on the stock remained the property of plaintiff, not the state. 342 Ill. App. 3d at 74. Lastly, the court determined that a "taking" occurred when the Treasurer decided not to return the dividends to plaintiff. 342 Ill. App. 3d at 75. The court remanded the matter to the circuit court for a determination of the compensation, if any, due plaintiff. 342 Ill. App. 3d at 76.

After defendants' petition for appeal was allowed, we also took under advisement plaintiff's motion for judicial notice of a pamphlet published by the Treasurer, interpreting the Act. We deny the motion because the material offered reiterates information already available to the court. We now turn to a discussion of the issues at bar.

ANALYSIS

As noted above, the circuit court granted defendants' hybrid motion for dismissal on the section 2-615 grounds that plaintiff had failed to exhaust his administrative remedies. A motion under section 2-615 of the Code of Civil Procedure attacks the legal sufficiency of the complaint. Illinois Graphics Co. v. Nickum, 159 Ill. 2d 469, 484 (1994). Such a motion does not raise affirmative factual defenses, but alleges only defects appearing on the face of the complaint. Illinois Graphics, 159 Ill. 2d at 484; Kolegas v. Heftel Broadcasting Corp., 154 Ill. 2d 1, 8 (1992). Thus, the question presented by a section 2-615 motion is whether the allegations of the complaint, when viewed in a light most favorable to the plaintiff, are sufficient to state a cause of action upon which relief can be granted. Vernon v. Schuster, 179 Ill. 2d 338, 344 (1997); Bryson v. News America Publications, Inc., 174 Ill. 2d 77, 86-87 (1996). In ruling on a section 2-615 motion, a trial court is to consider only the allegations of the pleadings. Illinois Graphics, 159 Ill. 2d at 484; Urbaitis v. Commonwealth Edison, 143 Ill. 2d 458, 475 (1991). Further, the trial court should dismiss the cause of action only if it is clearly apparent that no set of facts can be proven which will entitle the plaintiff to recovery. Bryson, 174 Ill. 2d at 86-87; Illinois Graphics, 159 Ill. 2d at 488. A court of review determines de novo whether the trial court should have granted dismissal. Beahringer v. Page, 204 Ill. 2d 363, 369 (2003).

The appellate court believed that plaintiff's failure to exhaust his administrative remedies limited the court to confine its analysis solely to the question of whether section 15 was facially unconstitutional in its entirety. We do not agree that the analysis must be limited in this fashion because, as we will explain, two other exceptions to the exhaustion doctrine are also present in this case. In order to facilitate an understanding of our holding with respect to the exhaustion issue, we believe it helpful to set out a brief overview of the procedures involved in both the reporting and the claiming of abandoned property under the Act.

Persons in possession of property belonging to another are required, pursuant to the Act, to timely report and to remit to the Director of Financial Institutions (now to the Treasurer) property presumed abandoned. 765 ILCS 1025/1 et seq. (West 1998). Generally, property is presumed abandoned if it is unclaimed by the owner for a period of five years. See 765 ILCS 1025/2 (West 1998). The property holder's responsibility to the owner for ...


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