Esmail v. Department of Revenue , 371 Ill. App. 3d 778 ( 2007 )

No. 2--06--0277
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT
______________________________________________________________________________
BASIM ESMAIL, ) Appeal from the Circuit Court
) of Du Page County.
Plaintiff-Appellant, )
)
v. ) No. 05--MR--1056
)
THE DEPARTMENT OF REVENUE, ) Honorable
) Bonnie M. Wheaton,
Defendant-Appellee. ) Judge, Presiding.
______________________________________________________________________________
JUSTICE KAPALA delivered the opinion of the court:
Plaintiff, Basim Esmail, was president, secretary, and treasurer of Bazco Enterprises, Inc.,
d/b/a Extra Value Liquors (Bazco), a retail liquor business. The Illinois Department of Revenue (the
Department) assessed a penalty against plaintiff in the amount of $72,039.34 for wilfully failing to
pay the business's sales tax obligations under the Retailers' Occupation Tax Act (Retailer's Act) (35
ILCS 120/1 et seq. (West 2004)). Plaintiff was held personally liable for the tax delinquency,
pursuant to section 3--7 of the Uniform Penalty and Interest Act (UPI Act) (35 ILCS 735/3--7 (West
2004)). Section 3--7 of the UPI Act provides that any corporate officer who is responsible for "filing
returns and making payment of the amount of any trust tax" and "who wilfully fails to file the return
or make the payment to the Department *** shall be personally liable" for the delinquency. 35 ILCS
735/3--7(a) (West 2004). Plaintiff protested the notice of penalty liability and, following an
No. 2--06--0277
administrative hearing, the Department issued a final assessment against plaintiff. Plaintiff filed a
timely complaint for administrative review in the circuit court. The Department moved to dismiss for
plaintiff's failure to file the requisite bond pursuant to section 3--7 of the UPI Act, which provides for
involuntary dismissal in the event the plaintiff taxpayer fails to post a bond within the specified time
frame. See 35 ILCS 735/3--7(b--5) (West 2004). After arguments, the trial court granted the
dismissal, denied plaintiff's motion to file a bond instanter, and entered judgment against plaintiff.
Plaintiff timely appeals.
On appeal, plaintiff argues that the trial court abused its discretion by denying his request for
leave to file a late bond. We affirm.
The right to administrative review is conferred by statute. Belleville Toyota, Inc. v. Toyota
Motor Sales, U.S.A., Inc., 199 Ill. 2d 325, 334 (2002); McGaughy v. Illinois Human Rights Comm'n,
165 Ill. 2d 1, 6 (1995). Parties to a proceeding before an administrative agency are barred from
obtaining judicial review of the agency's administrative decision unless review is sought within the
time and in the manner provided by the statute. Nudell v. Forest Preserve District, 207 Ill. 2d 409,
413-14 (2003).
Here, plaintiff was found personally liable for the tax delinquency, pursuant to section 3--7
of the UPI Act. 35 ILCS 735/3--7 (West 2004). Section 3--7 provides the procedures for seeking
administrative review of a final assessment issued under this section and states as follows:
"Any person filing an action under the Administrative Review Law [(735 ILCS 5/3--
101 et seq. (West 2004))] to review a final assessment or revised final assessment *** issued
by the Department under this Section shall, within 20 days after filing the complaint, file a
bond with good and sufficient surety or sureties residing in this State or licensed to do
business in this State, or instead of bond, obtain an order from the court imposing a lien upon
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the plaintiff's property as hereinafter provided. If the person filing the complaint fails to
comply with this bonding requirement within 20 days after filing the complaint, the
Department shall file a motion to dismiss and the court shall dismiss the action unless the
person filing the action complies with the bonding requirements set out with this provision
within 30 days after the filing of the Department's motion to dismiss.
Upon dismissal of a complaint for failure to comply with this subsection, the court
shall enter judgment against the taxpayer and in favor of the Department in the amount of the
final assessment or revised final assessment, together with any interest that has accrued since
the Department issued the final assessment or revised final assessment, and for costs." 35
ILCS 735/3--7(b--5) (West 2004).
Plaintiff filed his complaint for administrative review on August 24, 2005. On September 28,
2005, the Department filed a motion to dismiss for plaintiff's failure to post bond within 20 days of
filing the complaint, as required by section 3--7(b--5) (35 ILCS 735/3--7(b--5) (West 2004)). The
motion was accompanied by a certificate of service indicating that service was made by regular mail
on plaintiff's attorney on September 29, 2005. On November 3, 2005, the Department filed a second
motion to dismiss for failure to post bond within 30 days after the filing of the Department's motion
to dismiss. On November 30, 2005, plaintiff appeared in court and requested leave to post a cash
bond instanter by cashier's check made payable to the clerk of the court in the amount of $100,000.
Plaintiff alleged that he had not received the first motion; however, the trial court accepted the
Department's representations that its attorney had in fact mailed the document on the date indicated
on the certificate of service and thus had complied with the statute. The court granted the
Department's motion to dismiss and entered judgment against plaintiff. Plaintiff argues that the trial
court erred in granting the Department's motion to dismiss, because the trial court had discretion to
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allow plaintiff to post bond even though 30 days had passed since the Department filed its first motion
to dismiss.
Where the language of a statute is clear and unambiguous, the court must enforce it as
written. "It may not annex new provisions or substitute different ones, or read into the statute
exceptions, limitations, or conditions which the legislature did not express." Hines v. Department of
Public Aid, 221 Ill. 2d 222, 230 (2006). "The use of the word 'shall' evinces the legislature's intent
to impose a mandatory obligation." People v. McClure, 218 Ill. 2d 375, 382 (2006); Jakstas v.
Koske, 352 Ill. App. 3d 861, 863 (2004). Moreover, "[a] strong indication that the legislature
intended a provision to be mandatory is if the statute prescribes a consequence for failing to obey the
statutory provision." O'Brien v. White, 219 Ill. 2d 86, 96 (2006).
Section 3--7(b--5) states that a person filing an action to review a final assessment "shall" file
a bond or obtain an order imposing a lien upon the plaintiff's property within 20 days of filing his
complaint, and requires that the "court shall dismiss the action unless the person filing the action
complies with the bonding requirements set out with this provision within 30 days after the filing of
the Department's motion to dismiss." (Emphasis added.) 35 ILCS 735/3--7(b--5) (West 2004). The
use of the word "shall" suggests that the bonding requirements in section 3--7(b--5) are mandatory.
See Jakstas, 352 Ill. App. 3d at 863. In addition, section 3--7(b--5) clearly prescribes a consequence
for a plaintiff's failure to meet the bonding requirements within 30 days of the Department's motion
to dismiss. See O'Brien, 219 Ill. 2d at 96. This consequence reinforces the mandatory nature of the
bonding requirements. See O'Brien, 219 Ill. 2d at 96. As a result, we reject plaintiff's argument that
the language of section 3--7(b--5) is merely directive, and we find that the plain language of section
3--7(b--5) mandates the trial court to dismiss a plaintiff's action when the bonding requirements are
not met.
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Moreover, although there is limited case law interpreting section 3--7 of the UPI Act, section
12 of the Retailer's Act contains bond requirements that are substantively similar to the requirements
under the UPI Act, and these bond requirements have also been strictly enforced. Compare 35 ILCS
735/3--7 (West 2004) with 35 ILCS 120/12 (West 2004). Section 12 of the Retailers' Act similarly
provides for review of final administrative decisions of the Department under the Administrative
Review Law. Section 12 provides, in pertinent part:
"Any person filing an action under the Administrative Review Law to review a final
assessment or revised final assessment issued by the Department under this Act shall, within
20 days after filing the complaint, file a bond with good and sufficient surety or sureties
residing in this State or licensed to do business in this State or, instead of the bond, obtain an
order from the court imposing a lien upon the plaintiff's property as hereinafter provided. If
the person filing the complaint fails to comply with this bonding requirement within 20 days
after filing the complaint, the Department shall file a motion to dismiss and the court shall
dismiss the action unless the person filing the action complies with the bonding requirement
set out in this provision within 30 days after the filing of the Department's motion to dismiss."
35 ILCS 120/12 (West 2004).
We note that the provision originally went on to read: "When dismissing the complaint, the
court shall enter judgment against the taxpayer and in favor of the Department in the amount of the
final assessment or revised final assessment, together with any interest which may have accrued since
the Department issued the final assessment or revised final assessment, and for costs, which judgment
is enforceable as other judgments for the payment of money." Ill. Rev. Stat. 1983, ch. 120, par. 451.
As of 1984, the provision was amended to describe the bond requirements as "jurisdictional
prerequisites." See 35 ILCS 120/12 (West 2004) ("Upon dismissal of any complaint for failure to
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comply with the jurisdictional prerequisites herein set forth, the court is empowered to and shall enter
judgment against the taxpayer and in favor of the Department in the amount of the final assessment
or revised final assessment, together with any interest ***" (emphasis added)); Meyer Steel Drum,
Inc. v. Department of Revenue, 152 Ill. App. 3d 84, 85-86 (1987). However, the cases cited herein
analyzed the provision prior to this amendment and thus considered language of the Retailer's Act that
largely mirrored the current language of the UPI Act.1
Under that language, the bond requirements are mandatory, as a bond is necessary to protect
the State against a taxpayer's dissipating or otherwise disposing of assets while review is pending
before the trial court. Glasco Electric Co. v. Department of Revenue, 86 Ill. 2d 346, 351 (1981) (the
language, "shall be dismissed," in the context of the entire statute, looking particularly to the purpose
of the legislation, indicates that the provision requiring a bond to be filed within 20 days is to be construed
as mandatory); Cottage Hill Operating Co. v. Department of Revenue, 135 Ill. App. 3d 63, 66 (1985).
The Department may, of course, waive its right to a timely bond by express agreement or by failing
to move to dismiss a taxpayer's complaint for failure to file a bond and, instead, proceeding to the
merits of the case. Cottage Hill, 135 Ill. App. 3d at 69. However, when the Department moves to
dismiss before an adequate bond is tendered, the Department is entitled to dismissal. Tick Brothers,
1
Initially, the Retailer's Act provided only 20 days for compliance with the requirement to post
bond; the provision was amended in 1995 to provide, as does section 3--7 of the UPI Act, that if the
plaintiff fails to file the requisite bond within 20 days, the Department shall file a motion to dismiss,
and if the plaintiff fails to comply with the bond requirement within 30 days of the motion to dismiss,
the court shall then dismiss the action. See Pub. Act 89--60, eff. June 30, 1995. However, this
amendment does not affect our analysis.
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Inc. v. Department of Revenue, 104 Ill. 2d 61, 63-64 (1984) ("there can be no doubt that the
Department is entitled to a dismissal if it so moves before an adequate bond is tendered"); Meyer, 152
Ill. App. 3d at 87. Thus, where the Department has moved for dismissal of the complaint for failure
to post a timely bond, it is error for the trial court to allow the plaintiff to file a late bond. See
Cottage Hill, 135 Ill. App. 3d at 65 (trial court erred in permitting taxpayer to file a late appeal bond
where the Department moved for dismissal). Accordingly, in this case, where plaintiff failed to post
bond within the time frame set forth in section 3--7 of the UPI Act, and the Department moved for
a dismissal on this basis, the trial court properly granted the Department's motion to dismiss, pursuant
to the mandatory language of the statute.
Lastly, we reject plaintiff's argument that he should have been granted leave to file a late bond
because he alleged that he did not receive notice of the initial motion to dismiss. As the trial court
observed, the Department properly proved service of the motion by mail (145 Ill. 2d Rs. 11(b)(3),
12(b)(3)), and "[s]ervice of a document by mail is not invalid merely because the party to be served
denies receiving it" (Ingrassia v. Ingrassia, 156 Ill. App. 3d 483, 501 (1987)). See also Bernier v.
Schaeffer, 11 Ill. 2d 525, 529 (1957) ("If the proper giving of the notice can now be frustrated by the
mere allegation of the defendant that he did not receive it, then the giving of notice by mail cannot
be relied upon even though the rules specify such a method").
For these reasons, the judgment of the circuit court of Du Page County dismissing plaintiff's
complaint and entering judgment in favor of the Department is affirmed.
Affirmed.
BOWMAN and HUTCHINSON, JJ., concur.
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