Opinion
No. 2-12-0707 No. 2-12-0708
03-27-2013
SCOTT O'CONNELL and SUSAN O'CONNELL, Plaintiffs-Appellants, v. GWEN HENRY, County Treasurer and ex officio County Collector of Du Page County, Illinois, Defendant-Appellee (Board of Education of Downers Grove Grade School District No 58, Intervenor-Appellee).
NOTICE: This order was filed under Supreme Court Rule 23 and may not be cited as
precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).
Appeal from the Circuit Court
of Du Page County.
No. 10-TO-9
Honorable
Paul M. Fullerton,
Judge, Presiding.
No. 11-TO-13
JUSTICE HUDSON delivered the judgment of the court.
Justices Zenoff and Schostok concurred in the judgment.
ORDER
¶ 1 Held: (1) We dismissed one of plaintiffs' appeals, as the judgment was final as to only part of the action and the trial court's finding that the judgment was "final and appealable" was not an effective Rule 304(a) finding; (2) the trial court properly dismissed plaintiffs' complaint objecting to property taxes earmarked for a school district's working-cash fund: the district was entitled to raise cash for that fund even beyond the needs of "full operation," as long as there was no clear abuse of discretion under the Miller test, which plaintiffs did not allege. ¶ 2 These consolidated appeals arise from orders of the circuit court of Du Page County dismissing tax objection complaints filed by Susan and Scott O'Connell against Gwen Henry, the treasurer and ex officio county collector of Du Page County (Collector). In case No. 2-12-0707, the complaint pertained to property taxes for 2009 and consisted of five separate objections to taxes levied by Downers Grove Grade School District No. 58 (District) for various purposes. The complaint in case No. 2-12-0708 challenged the extension, for 2010, of a tax of $.0037 per $100,000 of equalized assessed valuation to be placed in the District's working cash fund. The O'Connells sought a refund of $7.64. In both cases, the District and the Collector jointly filed combined motions to dismiss under sections 2-615 and 2-619 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615, 2-619 (West 2010)). In case No. 2-12-0707, the trial court dismissed the O'Connells' third objection—which challenged a levy to make payments on fire prevention and safety bonds issued by the District—with prejudice pursuant to section 2-619 and dismissed the other four objections without prejudice pursuant to section 2-615. Upon the denial of the O'Connells' motion for reconsideration, the trial court entered an order stating, "This is a final and appealable order." In case No. 2-12-0708, the trial court granted the combined motion and dismissed the complaint with prejudice. These appeals followed. We dismiss the appeal in case No. 2-12-0707. In case No. 2-12-0708, we affirm. ¶ 3 Initially, we consider our jurisdiction in case No. 2-12-0707. Although neither party has raised any issue concerning this court's jurisdiction, we have an independent duty to examine our jurisdiction and to dismiss an appeal if jurisdiction is wanting. Ferguson v. Riverside Medical Center, 111 Ill. 2d 436, 440 (1985). Our jurisdiction is limited to appeals from final judgments unless an appeal is within the scope of one of the exceptions established by our supreme court permitting appeals from interlocutory orders in certain circumstances. Puleo v. McGladrey & Pullen, 315 Ill. App. 3d 1041, 1043 (2000). A judgment is final if it terminates the litigation between the parties on the merits or disposes of the parties' rights with regard to either the entire controversy or a separate part of it. R.W. Dunteman Co. v. C/G Enterprises, Inc., 181 Ill. 2d 153, 159 (1998). Where the trial court enters a final judgment as to only part of the controversy, appellate jurisdiction depends on Illinois Supreme Court Rule 304(a) (eff. Feb. 26, 2010), which provides, in pertinent part, "[i]f multiple parties or multiple claims for relief are involved in an action, an appeal may be taken from a final judgment as to one or more but fewer than all of the parties or claims only if the trial court has made an express written finding that there is no just reason for delaying either enforcement or appeal or both." (Emphasis added.) ¶ 4 The complaint in case No. 2-12-0707 consisted of five separate objections, four of which were dismissed without prejudice. It is well established that "an order of dismissal granted without prejudice is not deemed final for purposes of appeal." Department of Health Care & Family Services v. Cortez, 2012 IL App (2d) 120502, ¶ 10. Thus, the trial court's order was a final judgment only with respect to the third objection (which was dismissed with prejudice). A Rule 304(a) finding was necessary to vest us with jurisdiction to review that order. As noted, the trial court's order denying the O'Connells' motion to reconsider stated, "This is a final and appealable order." However, "[a] circuit court's declaration that an order is 'final and appealable,' without reference to the justness of delay, or even reference to immediate appealability, evinces no application of the discretion Rule 304(a) contemplates." Palmolive Tower Condominiums, LLC v. Simon, 409 Ill. App. 3d 539, 544 (2011). Accordingly, the appeal in case No. 2-12-0707 is premature and must be dismissed. ¶ 5 We note, however, that In re Marriage of Knoerr, 377 Ill. App. 3d 1042, 1049-50 (2007), provides for the possible reinstatement of a premature appeal. In Knoerr, we stated:
"[W]e dismiss respondent's appeal because on the present record, respondent's notice of appeal is premature. We presume that respondent can timely file a notice of appeal upon the resolution of the pending petition for a rule to show cause and any other pending claims in this matter. However, if pending claims have been resolved and the time to file a new notice of appeal has expired, [Illinois Supreme Court] Rule 303(a)(2) [(eff. May 1, 2007)] allows respondent to establish the effectiveness of the present notice of appeal. In the latter event, respondent may file a petition for rehearing and to supplement the record, thereby establishing our jurisdiction to address the merits." (Emphasis added.) Id.Thus, if, during the pendency of this appeal, the trial court resolved the four objections that it dismissed without prejudice, the O'Connells may file a petition for rehearing and to supplement the record in order to establish jurisdiction. ¶ 6 We now turn to case No. 2-12-0708, which arises from an order granting a joint motion to dismiss under sections 2-615 and 2-619 of the Code (735 ILCS 5/2-615, 2-619 (West 2010)). A section 2-615 motion to dismiss "attacks the legal sufficiency of a complaint and alleges only defects on the face of the complaint." Doe ex rel. Ortega-Prion v. Chicago Board of Education, 339 Ill. App. 3d 848, 853 (2003). "The question to be decided when ruling on a section 2-615 motion to dismiss is whether the plaintiff has alleged sufficient facts which, if proved, would entitle the plaintiff to relief." Id. In contrast, "[a] section 2-619 motion to dismiss admits the sufficiency of the complaint, but asserts affirmative matter that defeats the claim." Bjork v. O'Meara, 2013 IL 114044, ¶ 21. Our review is de novo. Cove Management v. AFLAC, Inc., 2013 IL App (1st) 120884, ¶ 18. As explained below, the O'Connells' complaint objecting to the portion of their 2010 property taxes earmarked for the District's working cash fund fails to set forth facts entitling them to relief. Thus, dismissal was proper pursuant to section 2-615. ¶ 7 Article 20 of the School Code (105 ILCS 5/art. 20 (West 2010)) provides for the creation of working cash funds and governs the use of the funds. Section 20-2 provides, in pertinent part:
"For the purpose of creating, re-creating, or increasing a working cash fund, the school board of any *** district [with a population less than 500,000] may incur an indebtedness and issue bonds as evidence thereof in an amount or amounts not exceeding in the aggregate 85% of the taxes permitted to be levied for educational purposes for the then current year to be determined by multiplying the maximum educational tax rate or rates applicable to such school district by the last assessed valuation or assessed valuations as determined at the time of the issue of said bonds plus 85% of the last known entitlement of such district to taxes as by law now or hereafter enacted or amended, imposed by the General Assembly of the StateIn addition (or as an alternative) to issuing bonds to raise cash for its working cash fund, a school district "may also levy annually upon all the taxable property of their district a tax, known as the 'working cash fund tax,' not to exceed 0.05% of value, as equalized or assessed by the Department of Revenue; provided that no such tax shall be levied if bonds are issued in amount or amounts equal in the aggregate to the limitation set forth in Section 20-2 for the creation, re-creation, or increase of a working cash fund." 105 ILCS 5/20-3 (West 2010). ¶ 8 Section 20-4 of the School Code provides, in pertinent part:
of Illinois to replace revenue lost by units of local government and school districts as a result of the abolition of ad valorem personal property taxes, pursuant to Article IX, Section 5, paragraph (c) of the Constitution of the State of Illinois." 105 ILCS 5/20-2 (West 2010).
"Moneys derived from the issuance of bonds as authorized by Section 20-2, or from any tax levied pursuant to Section 20-3, shall be used only for the purposes and in the manner provided in this Article. Moneys in the fund shall not be regarded as current assets available for school purposes. The school board may appropriate moneys to the working cash fund up to the maximum amount allowable in the fund, and the working cash fund may receive such appropriations and any other contributions. Moneys in the fund may be used by the school board for any and all school purposes and may be transferred in whole or in part to the general funds or both of the school district and disbursed therefrom in anticipation of the collection of taxes lawfully levied for any or all purposes, or in anticipation of such taxes as by law now or hereafter enacted or amended are imposed by the General Assembly of the State of Illinois to replace revenue lost by units of local government and school districts as a result of the abolition of ad valorem personal property taxes, pursuant to Article IX, Section¶ 9 Section 20-10 of the School Code (105 ILCS 5/20-10 (West 2010)), which was added in 2010 (see Pub. Act 96-1277, § 5 (eff. July 26, 2010)), authorizes permanent transfers to "any fund or funds of the district most in need of the money" and validates such transfers that occurred before section 20-10 took effect. ¶ 10 The statutes at issue in this case are derived from section 134½ of An Act to Establish and Maintain a System of Free Schools (Ill. Rev. Stat. 1931, ch. 122, ¶ 157a). Commenting on that provision (and similar ones permitting cities and counties having certain populations to maintain working cash funds), our supreme court stated in Mathews v. City of Chicago, 342 Ill. 120, 125 (1930), that "the working cash fund constitutes a revolving fund from which money may be transferred to other funds in anticipation of taxes to be collected for the purposes of such other funds, to be re-paid later out of the taxes levied for such other funds when collected, and a method is provided enabling the municipality to do business on a cash basis by transferring money from the working cash fund to other funds during the time between the levy of taxes for such other funds and the collection of the taxes so levied." The Mathews court further explained:
5(c) of the Constitution of the State of Illinois. Moneys so transferred to any other fund shall be deemed to be transferred in anticipation of the collection of that part of the taxes so levied or to be received which is in excess of the amount thereof required to pay any warrants or notes and the interest thereon theretofore and thereafter issued in anticipation of the collection thereof and such taxes when collected shall be applied to the payment of any such warrants and the interest thereon, the amount estimated to be required to satisfy debt service and pension or retirement obligations, as set forth in Section 12 of the State Revenue Sharing Act and then to the reimbursement of such working cash fund as hereinafter provided.
Upon receipt by the school district of any taxes in anticipation of the collection whereof moneys of the working cash fund have been so transferred for disbursement, the fund shall immediately be reimbursed therefrom until the full amount so transferred has been retransferred to the fund. Unless the taxes so received and applied to the reimbursement of the working cash fund prior to the first day of the eighth month following the month in which due and unpaid real property taxes begin to bear interest are sufficient to effect a complete reimbursement of such fund for any moneys transferred therefrom in anticipation of the collection of such taxes, the working cash fund shall be reimbursed for the amount of the deficiency therein from any other revenues accruing to the educational fund, and the school board shall make provisions for the immediate reimbursement of the amount of any such deficiency in its next annual tax levy." 105 ILCS 5/20-4 (West 2010).
"Under our law for the levy and collection of taxes the levies are made at various dates, usually in the months from March to September, including both. The taxes are not extended until December or until January or February of the next year, and the collection cannot proceed until the extension is completed. Liabilities accrue against the municipalities after the levies are made which must be met from the levies whose collection will not begin for several months. *** The greater part of the tax levied is not paid until a year or more after the levy, and for this reason a deficit arises in the treasury of every municipal corporation, which must be provided for if its credit is to be maintained and its warrants to be paid and not hawked about to be sold at a discount. Accordingly the Legislature, to meet this situation, passed a law in 1879 *** providing for the issue of tax warrants whenever there¶ 11 The Mathews court rejected a taxpayer's constitutional argument that accumulation of moneys in the working cash fund was not a public purpose within the scope of a school district's taxing power. The court concluded that it was no objection that working cash funds were "banking funds," i.e., that "the money is never expended or used in the sense that it is permanently applied to any particular corporate use." Id. at 138. The court reasoned as follows:
was no money in the treasury to meet the ordinary and necessary expenses of any municipal corporation ***. [Citation.] *** The raising of a fund by the sale of bonds to meet the deficit and the establishment from the proceeds of such sale of a revolving fund *** is not different in principle from the raising each successive year of a fund for the same purpose by borrowing money by means of anticipation warrants." Id. at 136-37.
"The question of the establishment of a working cash fund plan as a means by which it should be made certain that the municipalities would be able to meet their ordinary expenses as they became due[,] either in lieu of or in connection with the use of tax anticipation warrants, is a question of sound business judgment. The legislature decided that the working cash fund plan should be adopted and the tax anticipation warrant plan should be continued. The working cash fund plan is within the principle announced by this court in the various decisions which have been cited. When it is in full operation there will be no occasion for the use of tax anticipation warrants, but until that time the municipalities will continue to use the tax anticipation warrant plan so far as it may be necessary." (Emphasis added.) Id. at 140.¶ 12 The taxpayers in Mathews also objected that the General Assembly had placed no limit on the amount that might be accumulated in a working cash fund. The court rejected the argument:
"The acts do not limit the amount of money which may be included in these working cash funds except by the limitation of the amount which may be levied annually to raise them, but the fund is in each case for the purpose of enabling such municipality 'to have in its treasury at all times sufficient money to meet demands thereon for ordinary and necessary expenditures for corporate purposes.' The amount that may be levied is left to the sound discretion and business judgment of the city council, the county board, or the board of education. It is impossible to establish by a fixed, unchanging rule the amount which may be necessary for the purposes indicated. A maximum tax rate is fixed as the limit beyond which the taxing body may not go, and such a rate is fixed in each one of these acts. If the maximum tax rate should turn out to produce a larger amount than is necessary for the purposes of the law, it is not to be presumed that the taxing authorities would levy such maximum rate or any rate higher than the exigencies of the situation demand. If, contrary to this presumption, such a levy should be made, the courts have the power to interfere and prevent a clear abuse by such authorities of their discretionary powers." (Emphasis added.)
Id. at 141. ¶ 13 The O'Connells contend that their tax objection complaint properly alleged that the Board abused its discretion in levying taxes for the working cash fund. Their argument, as we understand it, is that under Mathews a school district may raise cash for its working cash fund only until the fund is "fully operational," i.e., sufficient to permit the district to operate without resort to tax anticipation warrants. The statutes place no such limitation on a school district's authority to accumulate cash in its working cash fund. Nor can we extrapolate such a limitation from the Mathews court's observation that, when a school district's working cash fund is "in full operation," it will no longer be necessary to issue tax anticipation warrants. The Mathews court never suggested that once the working cash fund is "fully operational," no additional cash may be raised. Although at that point increasing the fund might not be strictly necessary, it hardly follows that doing so is strictly forbidden. Rather, as stated in Mathews, there must be a clear abuse of discretion before a court will interfere. That situation does not exist merely because a school district maintains a level of reserves in its working cash fund above what is necessary to cover temporary shortfalls in the district's other funds prior to the collection of taxes for the fiscal year. ¶ 14 In Allegis Realty Investors v. Novak, 379 Ill. App. 3d 636 (2008), we described the process devised by our supreme court for determining whether a taxing body has abused its discretion by accumulating too much money in its treasury:
"Our supreme court set forth the proper method for analyzing excess accumulations of money in Central Illinois Public Service Co. v. Miller, 42 Ill. 2d 542 (1969). In Miller, the court determined the total funds available for the fiscal year by adding the fund balance at the beginning of the fiscal year to the taxes extended for the prior year. This total was then divided by the average annual expenditure from the fund for the previous three fiscal years. In Miller, the total funds available were 2.84 times the annual average expenditure for the past three fiscal years and 3.24 times the amount expended in the last previous fiscal year. The court then concluded that any further tax levy would result in an illegal excess accumulation. However, the Miller test is not one to be applied with mathematical precision [citation], and the term 'accumulation' has been equated with an amount that exceeds two to three times the foreseeable expenditures of the taxing body. [Citation.] Once such an¶ 15 The O'Connells contend that "[w]orking cash funds are statutorily prohibited from having expenses" and therefore "attempting to perform a Miller test would be an absurdity." The argument is meritless. The Miller test, as described in Allegis Realty Investors, allows maintenance of considerable reserves. From an analytical standpoint, it makes no difference that a portion of the reserves are maintained in a discrete fund. For practical purposes, amounts on deposit in the working cash fund are functionally equivalent to surpluses in funds maintained by a school district for other purposes, such as educational purposes, operations and maintenance, transportation, and capital improvements (see 105 ILCS 5/17-2 (West 2010)). The Miller test is therefore applicable in this setting, the relevant question being whether, at the beginning of fiscal years when the bonds were issued, the balance of the district's funds (including the working cash fund) plus taxes extended for the prior year were two to three times the average annual expenditures from the preceding three years. The O'Connells did not allege that this was the case, and their complaint therefore failed to state a cause of action. ¶ 16 For the foregoing reasons, we dismiss the appeal in case No. 2-12-0707 and we affirm the judgment of the circuit court of Du Page County in case No. 2-12-0708. ¶ 17 No. 2-12-0707, Appeal dismissed. ¶ 18 No. 2-12-0708, Affirmed.
accumulation is shown, the taxing body is to be given an opportunity to present evidence showing the need for an accumulation of such magnitude." Id. at 638.