{ "id": 5809624, "name": "THE DEPARTMENT OF REVENUE, Appellant, v. JOSEPH BUBLICK & SONS, INC., et al.-(Max L. Bublick, Appellee.)", "name_abbreviation": "Department of Revenue v. Joseph Bublick & Sons, Inc.", "decision_date": "1977-11-04", "docket_number": "No. 48528", "first_page": "568", "last_page": "578", "citations": [ { "type": "official", "cite": "68 Ill. 2d 568" } ], "court": { "name_abbreviation": "Ill.", "id": 8772, "name": "Illinois Supreme Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "91 S. Ct. 38", "category": "reporters:federal", "reporter": "S. Ct.", "opinion_index": 0 }, { "cite": "27 L. Ed. 2d 48", "category": "reporters:federal", "reporter": "L. Ed. 2d", "opinion_index": 0 }, { "cite": "400 U.S. 821", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 12057666, 12057733, 12057895, 12057495, 12057585, 12057972, 12057398, 12057815, 12057272, 12057343 ], "opinion_index": 0, "case_paths": [ "/us/400/0821-06", "/us/400/0821-07", "/us/400/0821-09", "/us/400/0821-04", "/us/400/0821-05", "/us/400/0821-10", "/us/400/0821-03", "/us/400/0821-08", "/us/400/0821-01", "/us/400/0821-02" ] }, { "cite": "421 F.2d 1210", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 2156019 ], "weight": 2, "year": 1970, "pin_cites": [ { "page": "1215" } ], "opinion_index": 0, "case_paths": [ "/f2d/421/1210-01" ] }, { "cite": "372 F.2d 513", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 10816659, 2043422 ], "year": 1970, "pin_cites": [ { "page": "521" } ], "opinion_index": 0, "case_paths": [ "/us-ct-cl/178/0765-01", "/f2d/372/0513-01" ] }, { "cite": "431 F.2d 742", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 2227885 ], "year": 1967, "pin_cites": [ { "page": "745" } ], "opinion_index": 0, "case_paths": [ "/f2d/431/0742-01" ] }, { "cite": "359 Ill. 435", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 5276928 ], "pin_cites": [ { "page": "439" } ], "opinion_index": 0, "case_paths": [ "/ill/359/0435-01" ] }, { "cite": "373 Ill. 94", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2529673 ], "year": 1935, "pin_cites": [ { "page": "96-97" } ], "opinion_index": 0, "case_paths": [ "/ill/373/0094-01" ] }, { "cite": "37 Ill. App. 3d 988", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2718194 ], "weight": 2, "pin_cites": [ { "page": "992" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/37/0988-01" ] } ], "analysis": { "cardinality": 754, "char_count": 16578, "ocr_confidence": 0.897, "pagerank": { "raw": 6.301382648131427e-07, "percentile": 0.9582292249470915 }, "sha256": "c25bd55352aa2cfd76af2b513f722eb68bd0d52e679bd901cba8fab92bf32a23", "simhash": "1:aca2d149a2e58d74", "word_count": 2712 }, "last_updated": "2023-07-14T17:50:39.372501+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "THE DEPARTMENT OF REVENUE, Appellant, v. JOSEPH BUBLICK & SONS, INC., et al.-(Max L. Bublick, Appellee.)" ], "opinions": [ { "text": "MR. JUSTICE DOOLEY\ndelivered the opinion of the court:\nHere the issue is whether, if a corporation is unable to satisfy its tax liability under the Retailers\u2019 Occupation Tax Act (Ill. Rev. Stat. 1973, ch. 120, par. 440 et seq.), post-judgment action must be maintained against that corporation before the individual corporate officers may be called upon to assume this liability.\nThe controlling statute provides:\n\u201cAny officer or employee of any corporation subject to the provisions of this Act who has the control, supervision or responsibility of filing returns and making-payment of the amount of tax herein imposed in accordance with Section 3 of this Act and who wilfully fails to file such return or to make such payment to the Department shall be personally liable for such amounts, including interest and penalties thereon, in the event that after proper proceedings for the collection of such amounts, as provided in said Act, such corporation is unable to pay such amounts to the department; and the personal liability of such officer or employee as provided herein shall survive the dissolution of the corporation.\u201d (Emphasis added.) Ill. Rev. Stat. 1973, ch. 120, par. 452\u00bd.\nIn 1972 the Department of Revenue audited the records of defendant Joseph Bublick & Sons, Inc., for the period of July 1969 through April 1972. This audit revealed a deficiency, and an amended return was prepared showing the corporation owed $92,342.36 in taxes, penalty, and interest. Defendant Max L. Bublick, vice-president and treasurer of the corporation during these years, signed the amended return admitting this corporate tax liability. The corporation paid $5,000 towards the amount due. It went out of business in 1974.\nIn 1974 an action against the corporation and the defendant officers individually was instituted to collect the deficiency. Count I of the complaint sought recovery of the taxes from the corporation. Count II, in the alternative, sought recovery of the taxes from the individual corporate officer defendants under the statute previously mentioned.\nCount II alleged inter alia that the Department had attempted to collect the taxes from defendant Joseph Bublick & Sons, Inc., but that said defendant was \u201cunable to pay\u201d the amounts due. In their answer to this count the individual defendants stated that the corporate defendant was \u201cunable to pay\u201d the sums due and also asserted that the corporation did not have sufficient funds to pay the taxes; that during the period following the amended return it often had insufficient funds to pay existing trade creditors, and it had used such funds as it had to pay trade collectors, who, unless paid, would cause a liquidation of the corporation. This would allegedly result in a permanent inability of the corporation to discharge this obligation.\nMax Bublick, sole defendant in these proceedings on appeal, was the officer responsible for filing the monthly retailers\u2019 occupation tax return and the making of payment thereon. He arbitrarily instructed Sol Garland, who did the bookkeeping for this corporation, to report only 50% of the gross receipts on the ground that 50% of the corporation sales were resales and thus not taxable. He contended that in so doing he was unaware that the Retailers\u2019 Occupation Tax Act required a report of the total of all sales with a deduction for the sales for resale for which there was proper documentation.\nA casual examination of the monthly retailers\u2019 occupation tax form shows that the retailer must report the total of all sales, subtract the deductions allowed by law, such as sales for resale, and then report the \u201ctaxable receipts total,\u201d the difference between the total sales receipts and the total deductions. The method of merely listing 50% of the total receipts as those taxable obviously did not comply with the requirements of the Act.\nBublick, who had been in the retail business for many years, knew that the corporation had to file these tax returns monthly. He signed the corporate checks sent to the Department. He knew that sales for resale were not taxable and that a sales tax would be charged on sales for consumer use and not on sales for resale. He claimed lack of knowledge that the store must report the proceeds from all sales and then deduct the sales for resale. When the audit was conducted in 1972 by the Department of Revenue, no records or documentary evidence could be found to indicate that any of the store\u2019s sales were sales for resale. Accordingly, the store was assessed tax on 100% of its receipts.\nThe statute requires that a person engaged in selling personal property at retail shall keep books and records of all sales, together with invoices and all sales records. (Ill. Rev. Stat. 1975, ch. 120, par. 446.) It is further provided in the same section:\n\u201cTo support deductions *** on account of receipts from sales of tangible personal property for resale, *** entries in any books, records or other pertinent papers or documents of the taxpayer in relation thereto shall be in detail sufficient to show the name and address of the taxpayer\u2019s customer in each such transaction, the character of every such transaction, the date of every such transaction, the amount of receipts realized from every such transaction and such other information as may be necessary to establish the nontaxable character of such transaction under this Act.\u201d\nThe store kept sales slips. From these were determined commissions for the store\u2019s salesmen. Bublick could easily have determined sales for resale and for consumer use by merely looking at the sales slips to see whether a sales tax had been paid. At the trial this experienced merchant stated that he did not realize that it could be accomplished by this method until the Department had pointed it out to him.\nSo also an accounting firm examined the corporation\u2019s financial records yearly and filed its Federal tax return from these records. If Bublick did not know what to do with these deductions, the trial court pointed out that it would be inconceivable that he would not ask his accountant for information. Bublick was also characterized by the trial judge as a \u201csophisticated, hard-nosed, streetwise businessman.\u201d\nOn September 25, 1974, judgment under count I was entered on the pleadings against the defendant corporation in the amount of $107,933.73 for taxes, interest and penalties. Subsequently, a trial was held on the allegations of count II. On November 25, 1974, judgment was entered against defendant Max L. Bublick in an identical sum. A separate judgment was entered in favor of the other corporate officer defendants and against the plaintiff.\nOn December 17, 1974, in citation proceedings, the court ordered Central National Bank of Chicago to turn over to the Department of Revenue all assets of the corporation, and to retain all Bublick\u2019s assets until further order of court.\nBublick appealed from the judgment against him under count II. The Appellate Court for the First District, with one judge dissenting, reversed the judgment of the circuit court and entered judgment in favor of Bublick. (37 Ill. App. 3d 988.) This court granted leave to appeal pursuant to Rule 315 (58 Ill. 2d R. 315).\nThe appellate court held that the judgment of personal liability should not have been entered until \u201cproper proceedings\u201d had been instituted to collect the taxes from the corporation. (37 Ill. App. 3d 988, 992.) The proceedings referred to by the appellate court were the various summary remedies available to a judgment creditor.\nThere is no requirement in the statute that any post-judgment collection action be instituted against a corporation prior to the attachment of liability to the responsible officer or employee. The only condition precedent to the Department filing a suit against a corporate officer or employee under this statute for taxes owed by the corporation is that the corporation be \u201cunable to pay\u201d the taxes. Ill. Rev. Stat. 1973, ch. 120, par. 452\u00bd.\nHere it has been admitted in the pleadings that the corporation was \u201cunable to pay.\u201d The intelligent construction of the term \u201cproper proceedings,\u201d as those words are used in the statute, would seem to be to determine whether the corporation is unable to pay. The language of the statute is \u201c*** in the event that after proper proceedings for the collection of such amounts, as provided in said Act, such corporation is unable to pay such amounts,\u201d then personal liability shall attach. (Ill. Rev. Stat. 1973, ch. 120, par. 452\u00bd.) We have seen that in citation proceedings the court ordered turned over to the Department of Revenue the assets of Joseph Bublick & Sons, Inc., in its bank\u2019s possession. Upon ascertainment that the corporation is unable to pay the amounts due the Department of Revenue, the statute requiring proper proceedings for the collection of such amounts is satisfied, and an action may be maintained against the officer or employee who is responsible for filing the return and making payment to satisfy the liability of the corporation.\nIn our construction of this statute, the circuit court went further than the law exacted prior to the entry of judgment against Bublick. A statute is to be reasonably interpreted according to its intent and meaning. A situation within the object, spirit and meaning of the statute falls within it, although it may be without the letter of the law. \u201cWhere the spirit and intention of the legislature in adopting the acts are clearly expressed and their objects and purposes are clearly set forth, the courts are not confined to the literal meaning of the words used, when to do so will defeat the obvious intention of the legislature and result in absurd consequences not contemplated by it.\u201d (Harding v. Albert (1939), 373 Ill. 94, 96-97.) Specifically, in construing statutes relating to the collection of taxes, the policy of this court has been to give them a common sense meaning so as to avoid making collection difficult or impossible. People ex rel. Nash v. Chicago & Northwestern Ry. Co. (1935), 359 Ill. 435, 439.\nThe construction placed upon this statute by the appellate court is not consonant with a reasonable interpretation to accomplish the objective of this law.\nIn dealing with this issue we must not be unmindful of realities. Here the corporation collects the retailers\u2019 occupation tax from its customers at the time of its sale. The retailer corporation having collected the money, the customary procedure would be to account for and make payment to the Department of Revenue.\nThe reason for passing on the tax liability to the responsible officers is obvious.- The corporate officers could employ the funds collected for the State to pay corporate obligations as well as salaries and bonuses to employees, and thus make recovery of the funds from a defunct corporation an impossibility. There, of course, has to be some responsibility for the stewardship of the funds collected from the public for the State.\nIt is urged that there is no evidence that Bublick wilfully failed to file the return or pay the tax. Bublick contends that the terms \u201cwilfully failed\u201d means an \u201cintentional omission\u201d and that there was no such evidence to support such conduct.\nThe Act itself (Ill. Rev. Stat. 1973, ch. 120, par. 440 et seq.) does not define the words \u201cwilfully fail.\u201d However, section 6672 of the Internal Revenue Code of 1954 is similar to this statute. It, too, imposes personal liability on the corporate officer who \u201cwillfully fails to collect *** or truthfully account for and pay over\u201d a corporate employee\u2019s social security and Federal income withholding taxes. Both statutes impose liability for the tax on the responsible officer.\nThe cases arising under this Federal statute are of assistance here. According to them, wilful failure means a voluntary, conscious and intentional failure to pay the taxes. (Newsome v. United States (5th Cir. 1970), 431 F.2d 742, 745; White v. United States (U.S. Ct. Cl. 1967), 372 F.2d 513, 521.) As was observed in Monday v. United States (7th Cir. 1970), 421 F.2d 1210, cert. denied (1970), 400 U.S. 821, 27 L. Ed. 2d 48, 91 S. Ct. 38, in a civil action wilful conduct \u201cdenotes intentional, knowing and voluntary acts. It may also indicate a reckless disregard for obvious or known risks.\u201d 421 F.2d 1210, 1215.\nIn Illinois law the term \u201cwilful\u201d has a variety of meanings. In the Criminal Code of 1961 the terms \u201cwilful\u201d and \u201cwilfully\u201d have largely been eliminated. (See Ill. Ann. Stat., ch. 38, par. 4\u20143, Committee Comments.) Instead, criminal offenses are defined with reference to the four mental states enumerated in sections 4 \u2014 4, 4 \u2014 5, 4 \u2014 6, and 4 \u2014 7. One of these states is knowledge. Section 4 \u2014 5 states: \u201cConduct performed knowingly or with knowledge is performed wilfully, within the meaning of a statute using the latter term, unless the statute clearly requires another meaning.\u201d Ill. Rev. Stat. 1975, ch. 38, par. 4\u20145.\nIt is our opinion that a voluntary, conscious and intentional failure satisfies the requirements of \u201cwilfully fail,\u201d as those words are used in this particular act. Whether an employee or officer knowingly, voluntarily and intentionally fails to make this payment is an issue of fact to be determined by the trier of the fact on the basis of the circumstances and evidence adduced in the particular case. Here there was ample evidence to justify a finding that the defendant wilfully failed in his statutory obligation.\nThe judgment of the appellate court is reversed, and the judgment of the circuit court is affirmed.\nAppellate court reversed; circuit court affirmed.", "type": "majority", "author": "MR. JUSTICE DOOLEY" }, { "text": "MR. JUSTICE MORAN,\nspecially concurring:\nThe majority\u2019s interpretation of section 13% of the Retailers\u2019 Occupation Tax Act (Ill. Rev. Stat. 1973, ch. 120, par. 452\u00bd) has, in my opinion, excised one of the key provisions of the section, that being the effect of the words \u201cafter proper proceedings for the collection of such amounts, as provided in said Act.\u201d The Act provides for proper proceedings, which include suit by the Department for a judgment against the corporation and the execution of such judgment (Ill. Rev. Stat. 1973, ch. 120, par. 444), or issuance of a tax lien (Ill. Rev. Stat. 1973, ch. 120, par. 444a) and enforcement of said lien (Ill. Rev. Stat. 1973, ch. 120, pars. 444e, 444f), together with, according to the last two cited sections, all remedies otherwise available to a judgment creditor.\nGenerally, officers or employees of a corporation are not individually liable for the debts or tax obligations of the corporation, but, by enacting section 13%, the legislature excepted this general rule as it applies to the collection of the retailers\u2019 occupation tax. A reading of that section, quoted in the majority opinion, clearly indicates the legislative intent to prevent abuse of the exception by providing two safeguards for the officer or employee against whom the corporation\u2019s tax might, under the exception, be imposed: (1) The Department must first institute proper proceedings (as stated above) against the corporation and its assets for the collection of the tax and, after a determination that the corporation is unable to pay the tax, then (2) the Department must prove that the officer or employee having control, supervision, or responsibility for the filing and payment of the tax due willfully failed to file such return or make such payment. (I concur with the majority\u2019s finding that the Department, in the instant case, met its burden in this last regard.)\nThe two conditional safeguards are, in effect, rights granted by the legislature for the protection of an officer or employee. Under my interpretation of the statute, the protection of those rights would normally have made it necessary for the Department to follow through, by proper proceedings outlined above, to collect the judgment against the corporation (if only to determine that the corporation was unable to pay). Bublick, however, by his admission that the corporation was unable to pay, waived his protective right and relieved the Department of the obligation to proceed further to determine that which was already admitted.", "type": "concurrence", "author": "MR. JUSTICE MORAN," } ], "attorneys": [ "William J. Scott, Attorney General, of Springfield (Paul J. Bargiel and Mary Stafford, Assistant Attorneys General, of Chicago, of counsel), for appellant.", "Altheimer & Gray, of Chicago (Lionel G. Gross and Kenneth R. Gaines, of counsel), for appellee." ], "corrections": "", "head_matter": "(No. 48528.\nTHE DEPARTMENT OF REVENUE, Appellant, v. JOSEPH BUBLICK & SONS, INC., et al.-(Max L. Bublick, Appellee.)\nOpinion filed November 4, 1977.\nMORAN, J., specially concurring.\nWilliam J. Scott, Attorney General, of Springfield (Paul J. Bargiel and Mary Stafford, Assistant Attorneys General, of Chicago, of counsel), for appellant.\nAltheimer & Gray, of Chicago (Lionel G. Gross and Kenneth R. Gaines, of counsel), for appellee." }, "file_name": "0568-01", "first_page_order": 578, "last_page_order": 588 }