No. 3--96--0210
_________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
A.D. 1996
_________________________________________________________________
THE PEOPLE OF THE STATE OF ) Appeal from the Circuit Court
ILLINOIS, ex rel. JOHN W. ) of the 13th Judicial Circuit,
TOYNTON, COUNTY TREASURER ) La Salle County, Illinois
and ex officio COLLECTOR OF )
TAXES OF LA SALLE COUNTY, ) Nos. 89--TX--42, SUB 1
ILLINOIS ) 90--TX--41, SUB 5
) 91--TX--45, SUB 2
Plaintiff-Appellee, ) 92--TX--24, SUB 1
) 93--TX--66, SUB 2
v. ) 94--TX--42, SUB 1
)
COMMONWEALTH EDISON COMPANY, ) Honorable
) Robert L. Carter,
Defendant-Appellant. ) Judge Presiding
_________________________________________________________________
JUSTICE McCUSKEY delivered the opinion of the court:
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In five separate cases, Commonwealth Edison (ComEd) filed
objections to the taxes it paid various governmental bodies in
La Salle County for the tax years 1988 through 1992. The cases
were consolidated in the circuit court.
This appeal involves ComEd's objections to the real estate
taxes levied by Brookfield Township (Township) and by Brookfield-
Allen Multi-Township Assessment District (District). ComEd claimed
that the levies by the Township and the District were illegal
because of an excessive accumulation of funds. The circuit court
of La Salle County determined that ComEd did not meet its burden to
show that the tax levies were illegal. As a result, the court
granted summary judgment in favor of the Township and the District.
On appeal, ComEd initially argues that the undisputed evidence
showed the tax levies were unnecessary and illegal. ComEd
therefore contends that summary judgment should have been granted
in its favor. In the alternative, ComEd argues that the cases
should be remanded to the circuit court because the Township and
the District did not show that they were entitled to judgment as a
matter of law. Following our careful review of the record, we
agree with ComEd's second argument and remand the cases for an
evidentiary hearing in the circuit court of La Salle County.
FACTS
ComEd filed objections to the Township's levy of taxes for its
Road and Bridge fund for the 1988 and 1990 tax years. It objected
to the Township's levy for its Equipment and Building fund for the
1988, 1990, 1991 and 1992 tax years. In addition, ComEd filed
objections to the District's levy for its General Corporate
Purposes fund for the 1988, 1989, 1990, 1991 and 1992 tax years.
In each of these eleven objections, ComEd showed that the balance
remaining in the fund each year plus the taxes receivable for the
prior tax year greatly exceeded the average annual expenditures
from the fund. The accumulations in the funds ranged from 2.01 to
2.95 times the average annual expenditures for the previous three
years. ComEd claimed that these figures proved the Township and
the District abused their discretion when they levied additional
taxes when the funds already contained large accumulations.
On September 9, 1994, the Township and District filed a
response to ComEd's objections. The response did not dispute
ComEd's calculations. However, the Township and the District
argued that the fund balances were within the discretionary
parameters established by Illinois case law. Also, the Township
and the District explained the purpose of the funds and listed some
of the expenditures which had been made from the funds. However,
we note from our review of the record that no affidavits or other
evidentiary documents were attached to the pleadings to
substantiate any of the facts alleged in the response.
On November 7, 1995, the Township and District filed a motion
for summary judgment. They claimed that they were entitled to
summary judgment because ComEd had failed to meet its burden to
show that the levies were an abuse of the taxing bodies'
discretion. ComEd filed a response and a cross-motion for summary
judgment on January 2, 1996. ComEd argued that the undisputed
figures proved the challenged tax levies were unnecessary and
illegal because of the excessive accumulation remaining in each
fund.
A hearing was held in the circuit court during which no
evidence was presented. The Township and the District argued at
the hearing that there is no hard and fast rule under Illinois case
law concerning when an accumulation is excessive. They contended
that the accumulations were not excessive based upon established
Illinois law.
ComEd disagreed and argued that the fund accumulations were
excessive. ComEd noted that neither the Township nor the District
"offered any facts or any evidence to this Court in justification
for them making a continued levy in the face of these large
accumulations of funds." In response, the Township and the
District argued that it was not their burden to justify the
challenged levies. Following the hearing, the court concluded that
ComEd had not met its burden to show that the tax levies were
illegal. As a result, the court granted summary judgment in favor
of the Township and the District. ComEd filed a timely notice of
appeal.
ANALYSIS
I. Standard of Review
A motion for summary judgment should be granted when the
pleadings, depositions, admissions and affidavits show there is no
genuine issue as to any material fact and the moving party is
entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c)
(West 1994). Accordingly, summary judgment is proper only when the
resolution of a case hinges on a question of law and the moving
party's right to judgment is clear and free from doubt. In re
Estate of Hoover, 155 Ill. 2d 402, 410, 615 N.E.2d 736, 739 (1993).
In summary judgment cases, the reviewing court considers the
evidence de novo. Hoover, 155 Ill. 2d at 411, 615 N.E.2d at 740.
II. Law on Excessive Accumulation of Funds
The law is well settled that taxing bodies retain broad
discretion in estimating the dollar amounts necessary to carry out
their lawful objectives. In re Application of Rosewell, 159 Ill.
2d 393, 401, 639 N.E.2d 559, 562 (1994); In re Application of the
People ex rel. Anderson, 279 Ill. App. 3d 593, 596, 665 N.E.2d 521,
523 (1996). Thus, taxing bodies may proceed to levy real estate
taxes based upon these estimates. The law presumes that a taxing
body has properly discharged its legal duty and has not abused its
discretion when it makes the real estate tax levy. Anderson, 279
Ill. App. 3d at 596, 665 N.E.2d at 523. The mere fact that there
is a discrepancy between the amount of money levied in a given year
and the amount of money actually needed is of limited significance.
Rosewell, 159 Ill. 2d at 401-02, 639 N.E.2d at 563.
Accordingly, in "reviewing a taxpayer's objections to
governmental appropriations and levies, the courts play a limited,
although significant, role." Rosewell, 159 Ill. 2d at 401, 639
N.E.2d at 562. Moreover, the law is clear that tax objectors bear
a substantial burden of proof in establishing that a taxing body
has abused its discretion and has illegally accumulated or diverted
taxes. Rosewell, 159 Ill. 2d at 402, 404, 639 N.E.2d at 563-64.
However, the law is also clear that the "[u]nnecessary
accumulation of money in the public treasury is against the policy
of the law, and a levy or tax rate which results in such an
unnecessary accumulation is illegal." Anderson, 279 Ill. App. 3d
at 596, 665 N.E.2d at 523; see also Central Illinois Public Service
Co. v. Miller, 42 Ill. 2d 542, 543, 248 N.E.2d 89, 90 (1969). The
law is well-settled that courts will interfere in the taxing
process when it is necessary to prevent a clear abuse of a taxing
body's discretionary powers. Miller, 42 Ill. 2d at 543-44, 248
N.E.2d at 90.
In Miller, our supreme court set forth a formula for analyzing
whether a tax fund contains an excess accumulation. The court
added the fund balance at the beginning of the fiscal year to the
real estate taxes extended for the prior year to determine the
total amount of funds available for the fiscal year. The court in
Miller then divided this amount by the average annual expenditure
from the fund for the prior three fiscal years. In utilizing this
method, the court in Miller determined that the amount available in
the challenged fund was 2.84 times the average annual expenditure
and 3.24 times the amount actually expended in the prior fiscal
year. Miller, 42 Ill. 2d at 543, 248 N.E.2d at 90. Our supreme
court then noted that it had previously declared a real estate tax
levy illegal where the amount accumulated was almost twice the
estimated expenditures (citing People ex rel. Leaf v. Roth, 389
Ill. 287, 59 N.E.2d 643 (1945)) and where the cash on hand was
three times the average expenditure from the fund (citing People ex
rel. Schaefer v. New York, Chicago & St. Louis R.R. Co., 353 Ill.
518, 187 N.E. 443 (1933)). The supreme court noted that there was
"nothing in the record to indicate any unusual anticipated call
upon the fund or that the levy was for any purpose other than the
accumulation of monies in the fund." Miller, 42 Ill. 2d at 544,
248 N.E.2d at 90. In sum, the court determined that the levy was
not justified and was an abuse of discretion. Miller, 42 Ill. 2d
at 544-45, 248 N.E.2d at 90-91.
We stated in In re Application of O'Connor, 80 Ill. App. 3d
354, 356, 399 N.E.2d 683, 685 (1980), that the formula set forth in
Miller was the proper method for analyzing excess real estate tax
accumulations. In O'Connor, the taxpayer objectors' evidence
showed that the accumulation was 2.9 times the average expenditures
from the challenged fund. We concluded that an accumulation of
this size showed that the fund exceeded the bounds of necessity.
O'Connor, 80 Ill. App. 3d at 356-57, 399 N.E.2d at 685. As a
result, we held that the circuit court erred when it entered
judgment in favor of the taxing body at the close of the objectors'
case, after receiving evidence of this type of accumulation.
O'Connor, 80 Ill. App. 3d at 357, 399 N.E.2d at 685. We then
concluded that the taxing body should be given an opportunity, on
remand, to present testimony showing "the need for accumulations of
this magnitude." O'Connor, 80 Ill. App. 3d at 357, 399 N.E.2d at
685.
Subsequently, in Belke v. County of Peoria, 169 Ill. App. 3d
839, 523 N.E.2d 1295 (1988), we upheld the circuit court's order
denying relief where the challenged tax levy was for the specific
purpose of renovating the Peoria County courthouse. In deciding
the case, we noted:
"[i]n the context of tax objection cases,
a definition of 'accumulation' has emerged
which equates that term with amounts which
exceed two to three times the foreseeable
expenditures of the taxing body." Belke, 169
Ill. App. 3d at 844, 523 N.E.2d at 1298,
citing Miller, 42 Ill. 2d 542, 248 N.E.2d 89.
The Appellate Court, Second District, very recently concluded that
the Miller analysis was the proper formula for determining excess
accumulations. Anderson, 279 Ill. App. 3d at 596, 665 N.E.2d at
523. In that case, the accumulation was shown to be 1.65 times
average annual expenditures. Accordingly, the court in Anderson
found that the objectors had failed to meet their burden of showing
an excessive accumulation. Anderson, 279 Ill. App. 3d at 597-98,
665 N.E.2d at 524-25.
Based upon our review of applicable case law, we do not agree
with the argument that a taxpayer cannot meet its burden of showing
an excess accumulation unless the accumulation is at least 2.84
times the average annual expenditure. We find that argument to be
inconsistent with the Township's and District's statement before
the trial court that there is no hard and fast rule regarding when
an accumulation is excessive. Moreover, we find the argument
contrary to our finding in O'Connor that Miller did not provide "a
formula to be applied with mathematical precision." O'Connor, 80
Ill. App. 3d at 356, 399 N.E.2d at 685.
We are convinced that our interpretation of Miller as stated
in Belke is correct. Consequently, we conclude that a tax objector
can meet its burden to show an excessive accumulation by presenting
evidence that the accumulation in the fund exceeds two to three
times the average annual expenditures from the fund. Furthermore,
we are not persuaded otherwise by our review of the case law cited
by the Township and the District. All of those cases pre-date our
supreme court's decision in Miller. See, e.g., People ex rel.
Meyers v. Chicago & North Western Ry. Co., 1 Ill. 2d 255, 115
N.E.2d 339 (1953); People ex rel. Manifold v. Wabash Ry. Co., 386
Ill. 149, 53 N.E.2d 976 (1944).
We conclude that the circuit court in the instant case unduly
relied on Rosewell in finding that ComEd did not meet its burden of
showing an excess accumulation. In Rosewell, our supreme court
held that a real estate tax levy for expenses which were
anticipated when the levy was made, but turned out to be
unnecessary, was not an abuse of the taxing body's discretion.
Rosewell, 159 Ill. 2d at 407, 639 N.E.2d at 565. In sum, we
conclude that Rosewell is factually distinguishable from the
instant case.
III. Conclusion
ComEd's evidence showed that, using the Miller method of
analyzing the funds, the challenged funds contained from 2.01 to
2.95 times average annual expenditures. We find this evidence was
sufficient for ComEd to make a showing of excess accumulation and
to overcome the presumption that the taxing bodies did not abuse
their discretion in making the challenged levies. Because we
determine that ComEd's evidence raised a question of fact regarding
whether the tax levies were unnecessary and illegal, the Township
and the District were not entitled to summary judgment as a matter
of law. Consequently, the circuit court erred when it granted
summary judgment in favor of the taxing bodies.
Conversely, we also determine that ComEd was not entitled to
summary judgment. ComEd's evidence that the funds contained excess
accumulations does not automatically prove that the challenged tax
levies were illegal as a matter of law. The record reveals that no
evidence was presented below regarding the taxing bodies' need for
accumulations in the challenged funds. The Township and the
District did not present this evidence in the circuit court because
they contended, and the court agreed, that ComEd had not met its
burden. In O'Connor, under similar circumstances, we remanded the
case to the circuit court so the taxing body could present evidence
regarding the need for the accumulations in the challenged funds.
O'Connor, 80 Ill. App. 3d at 357, 399 N.E.2d at 685. From our
review of the record, we conclude that the same result is warranted
here. Accordingly, we remand this cause to the circuit court of La
Salle County for an evidentiary hearing to allow the Township and
the District the opportunity to present evidence in support of
their claim that the accumulations in the challenged funds are
justified and not an abuse of discretion.
For the reasons stated, the judgment of the circuit court of
La Salle County is reversed, and the cause is remanded.
Reversed and remanded.
HOLDRIDGE and MICHELA, JJ., concur.