State Life Ins. Co. v. Bd. of Educ. , 394 Ill. 301 ( 1946 )

On petitions for rehearing it is urged by both the Board of Education and the Fidelity Trust Company that this court in its opinion misconceived the rule prevailing in the Federal courts as to the finality of decrees; that the decree of the Federal court, which the opinion holds is res adjudicata as to the manner in which the 1929 tax money shall be applied to the payment of outstanding tax anticipation warrants, was interlocutory and not final, and does not constitute an adjudication on that question. It is argued that under the Federal rule the cause is still pending in the Federal court on the order of reference and that court may, at any time prior to the entry of a decree on the accounting, modify or change the decree to conform to the law of Illinois as announced by this court, and that it is its duty to do so.

As pointed out in the opinion, by that decree the Board of Education was permanently enjoined from distributing any of the 1929 tax money then on hand or thereafter collected, except on a prorata basis. By the mandatory provisions of the decree the board was ordered and directed to distribute all such funds then on hand or thereafter collected in that manner. From the date that decree was entered until the opinion of this court inLeviton v. Board of Education, 385 Ill. 599, was filed, more than six years later, all of the parties to the cause in which the decree was entered accepted and treated the decree as final. As such final decree they acted under it and conformed to all its provisions. All of the 1929 tax money on hand at the time the decree was entered and all of such funds thereafter collected were paid out by the Board of Education and accepted by the warrant holders under and in accordance with the decree.

On February 2, 1945, more than one year after this court had held in the Leviton case that no judgment could be lawfully entered, under the law of Illinois, against the Board of Education, for a wrongful diversion, by its officers, of tax funds, the board filed a motion in the case in the Federal court. By that motion it was alleged that the decree entered in 1937 was interlocutory; that the cause was still pending on the order of reference; that the decree was contrary to the law of Illinois as announced by this court in the Leviton case; that the Federal court was bound by that decision and that said decree should either be set aside or modified so as to conform to the law of Illinois. This motion was contested by some of the plaintiffs in that case. It was heard by the court and on June 20, 1945, denied.

On prorata distributions made under the decree, the Board of Education paid out large sums of the 1929 tax money to warrant holders who were not entitled to receive any of such funds if the warrants were paid in numerical order. Such funds were paid out under the mandates of the decree. They cannot now be recovered. As pointed out in the opinion, Fidelity Trust Company received, under the decree, more than $160,000 in payments on warrants held by it bearing such high numbers that nothing could have been paid on such warrants under a numerical distribution of the funds. It also received from the 1929 tax money more than $250,000 in interest payments which would not have accrued had it accepted numerical distribution and not obtained the decree in the Federal court compelling distribution of the funds on a prorata basis.

By this suit Fidelity Trust Company seeks a writ of mandamus to compel the Board of Education to distribute the 1929 tax money to the payment of the outstanding warrants in numerical order, which would be a direct violation of the decree of the Federal court, which decree is still in full force and effect. This court will not affirm a judgment awarding a writ of mandamus directing a party to a decree entered by the Federal court to violate such decree. As to the manner in which the 1929 tax money shall be distributed and applied to the payment of the outstanding tax warrants, we adhere to the conclusions reached in the opinion, that the decree of the Federal court is final and constitutes an adjudication of that question which is binding upon all the parties to this cause, notwithstanding that decree is contrary to the law of Illinois. We adhere to the conclusions announced inLubezny v. Ball, 389 Ill. 263, and in Berwind, Inc. v. ChicagoPark District, 393 Ill. 317, as to the manner in which tax anticipation warrants must be paid.

As to that part of the decree awarding money judgments in favor of the plaintiffs and against the Board of Education for their several prorata shares of all funds paid out on warrants in numerical order prior to the date of the entry of the decree, and referring the cause for the purpose of taking the account and ascertaining the amounts for which such judgments should thereafter be entered against the board, it may be that under the rule prevailing in the Federal courts the decree is interlocutory and the cause sub judice as to that issue. If this be true, the Federal court is at liberty at any time to modify the decree in this respect so as to conform to the law of Illinois. These are questions for the Federal court to determine. They are questions which are not presented on this record and with which we are not concerned in this case. We are not permitted to speculate or conjecture as to some suggested change or modification of the decree which the Federal court may or may not make at some future time. We can only determine the effect of the decree as entered and as it now exists. Particularly is this true where, as here, the Federal court has already denied a motion to make such changes and modifications in this decree.

A rehearing is denied.