The Carle Foundation v. Cunningham Township
45 N.E.3d 1173
Ill. App. Ct.2016Background
- The Carle Foundation owns four Urbana parcels (hospital, day care, power plant). They were tax-exempt pre-2004 but were assessed as taxable by local assessors from 2004–2011.
- Carle sought administrative exemptions for various years; it withdrew some applications and pursued a mix of administrative and judicial remedies. It obtained exemptions for 2012 under newly enacted section 15-86.
- Carle sued to establish exemptions for 2004–2011 under section 23-25(e) (the court-proceeding alternative when an exemption for a comparable year exists). Its fourth amended complaint included (1) a claim that prior exemptions were never validly terminated, (2) counts seeking exemptions under section 15-86 (or alternatively section 15-65), (3) a declaratory count (count II) that section 15-86 governs the remaining claims, and (4) a breach-of-settlement claim.
- The trial court granted summary judgment on count II, holding that section 15-86 applied to the 2004–2011 claims; the court also found the legislature intended section 15-86 to replace the Korzen/Methodist descriptive test. Defendants appealed.
- The appellate court considered (a) whether section 15-86 applies to court proceedings under section 23-25(e), (b) whether section 15-86 operates retroactively, and (c) whether section 15-86 is facially constitutional under Article IX, § 6 of the Illinois Constitution.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does section 15-86 apply to a court action under 35 ILCS 200/23-25(e)? | Section 23-25(e) admits the court to decide exemptions de novo under the statute that governs exemptions (15-86 applies indirectly via comparison to a comparable-year decision). | 15-86 is a pervasively administrative statute intended for Department review and should not be applied de novo in court proceedings. | Court: 15-86 can apply indirectly in a 23-25(e) action by factual comparison to the Department’s comparable-year decision; but applicability raises further issues. |
| Is section 15-86 retroactive to pre-enactment years and pending matters? | The statute should govern because the legislature intended it to reach decisions and applications described in section 90 of the amendatory act. | Retroactivity is improper and unfair to taxing districts; the court decision process is different from Department decisions/applications. | Court: Legislative language in section 90 shows a plain intent to make 15-86 apply retroactively to Department decisions and to applications pending or filed on or after the effective date. |
| Is section 15-86 facially consistent with Art. IX, § 6 (exclusive charitable use requirement)? | (Carle) Section 15-86 can be reasonably construed to remain subject to the constitutional exclusive-use requirement; alternatively, there are hypothetical circumstances where 15-86 would be constitutional. | (Township) 15-86 authorizes exemptions based on quantified service value (or subsidies) without requiring exclusive charitable use of the subject property, thus adding a new exemption beyond the constitution. | Court: Section 15-86 is facially unconstitutional because it conditions exemption on economic equivalence (services/subsidies) rather than the constitutionally required exclusive use of the property for charitable purposes. |
| Whether the trial court correctly granted declaratory relief that 15-86 governs the 2004–2011 claims | Carle: Yes—15-86 should govern the comparison and determination in the 23-25(e) action. | Defendants: No—15-86 is unconstitutional and/or inapplicable; summary judgment on count II was improper. | Court: Because 15-86 is unconstitutional and unenforceable, the trial court erred in granting summary judgment that 15-86 applies; judgment reversed and case remanded. |
Key Cases Cited
- Carle Foundation v. Illinois Department of Revenue, 396 Ill. App. 3d 329 (4th Dist. 2009) (interpreting section 23-25(e) and allowing election of remedy)
- Methodist Old Peoples Home v. Korzen, 39 Ill. 2d 149 (Ill. 1968) (describing characteristics of charitable institutions)
- Provena Covenant Medical Center v. Department of Revenue, 384 Ill. App. 3d 734 (3d Dist. 2008) (legislature may not broaden constitutional exemptions)
- Chicago Bar Ass’n v. Department of Revenue, 163 Ill. 2d 290 (Ill. 1994) (statutes listing examples of exclusively used property construed to require exclusive use)
- Best v. Best, 228 Ill. 2d 107 (Ill. 2008) (when a declaratory judgment is a separate final claim for appeal under Rule 304(a))
- Leopando v. Leopando, 96 Ill. 2d 114 (Ill. 1983) (distinguishing final separate claim from issues ancillary to a single cause)
- Caveney v. Bower, 207 Ill. 2d 82 (Ill. 2003) (statutory amendments that are substantive are presumed prospective absent clear legislative intent)
- One 1998 GMC v. [Title], 2011 IL 110236 (Ill. 2011) (discussion on facial challenges and statutory construction presumption of constitutionality)