CHILDRENS DEVELOPMENT CENTER INC. еt al., Appellees, v. WALTER A. OLSON, Township Assessor et al., Appellants.
No. 44115
Supreme Court of Illinois
October 2, 1972
52 Ill. 2d 332
The plaintiffs do not contend that the point where regulation begins should be higher than 3,650,000 gallons per year of discharge. They say that the failure to regulate and charge every concern which discharges industrial waste, in whatever amount, is violative of equal protection of the law. But, as has been observed, the legislature is not obliged to choose between regulation of all or none. We cannot regard as unreasonable per se a regulation applying only to those whose activities create a substantial burden or load on the facilities of the District. In addition, the testimony of the superintendent of the District was that the cost of treating industrial waste was not directly proportionate to the amount of waste treated. Rather the grеater amount of this waste to be treated, the higher was the rate. It was not unreasonable to determine that the need for a surcharge was clearest in the case of concerns discharging large quantities into the District‘s sewers.
The judgment of the circuit court of Cook County is affirmed.
Judgment affirmed.
PHILIP G. REINHARD, of Rockford (WILLIAM H. GATES, of counsel), for appellants.
KEEGAN & GOSDICK, of Rockford (ROBERT W. GOSDICK, of counsel), for appellees.
MR. JUSTICE RYAN delivered the opinion of the court:
This is an appeal from a decree of the circuit court of Winnebago County permanently restraining the cоllection of taxes assessed against real estate owned by the School Sisters of St. Francis (Sisters), a religious corporation, and
For several yeаrs Sisters had owned and maintained a convent in Rockford. Prior to 1969 the convent had not been assessed for real estate taxes. In August of that year Sisters entered into a lease whereby a part of the convent was leased to Center for a period of one year and the lease was subsequently renewed. Sisters is composed of a group of Roman Catholic nuns whose primary function is to teach in the parochial school system in Illinois. Center is a not-for-profit corporation whiсh provides programs for educationally handicapped children. It has out-patient treatment, physical therapy, speech therapy, occupational and family therapy, and serves 200 to 250 children. The income of Center is derived from the State of Illinois Department of Mental Health, the United Fund and from
Section 3 of article IX of the constitution of 1870 provides:
“The property of the State, counties and other municipal corporations, both real and personal, and such other property as may be used exclusively for agriсultural and horticultural societies, for school, religious, cemetery and charitable purposes, may be exempt from taxation; but such exemption shall be only by general law.”
Section 6 of article IX of the constitution of 1970 provides:
“The General Assembly by law may exempt from taxation only the property of the State, units of local government and school districts and property used exclusively for agricultural and horticultural societies, and for school, religious, cemetery and charitable purposes. ***”
Section 19.2 of the Revenue Act of 1939 (
It is not questioned that the activities conducted by
Defendants, relying on City of Mattoon v. Graham, 386 Ill. 180, The Oak Park Club v. Lindheimer, 369 Ill. 462, Turnverein “Lincoln” v. Board of Appeals, 358 Ill. 135, and People ex rel. Baldwin v. Withers Home, 312 Ill. 136, contend that if property is let for a return, it is used for profit and so far as its liability to the burden of taxation is concerned, it is immaterial whether the owner actually makes a profit or sustains a loss.
Plaintiffs relying on People ex rel. Goodman v. University of Illinois Foundation, 388 Ill. 363, and People ex rel. Hesterman v. North Central College, 336 Ill. 263, contend that the property must be leased “with a view to profit” and that the “mere fact that a part of the enterprise yields an income—incidental profit—is but of little importance.” 388 Ill. at 374.
The positions of both parties are sustained by the authorities cited. The apparent conflict in the two positions, however, is reconciled when consideration is given to the primary use to which the leased property was devoted in the cases cited. In Graham, Turnverein and Withers Home the leased property was used primarily for the production of income—profit. Whereas, in University of Illinois Foundation and North Central College the primary use of the leased property, while yielding incidental income, was to serve a function сonnected with the
We likewise consider that it is the primary use to which the property is devoted after the leasing which determines whether the tax-exempt status continues. If the primary use is for the production of income, that is, “with a view to profit,” the tax-exempt status is destroyed. Conversely, if the primary use is not for the production of income but to serve a tax-exempt purpose the tax-exempt status of the property continues though the use may involve an incidental production of income. Following the leasing the primary use to which the property was devoted was serving the tax-exempt charitable purpose of Center. This did not destroy the tax-exempt status of the leased property although the letting produced a return to Sisters.
The defendants point out that the status of real property for tax purposes is fixed as of January 1 of the year for which taxes are assessed. Since the lease from the Sisters to Center was not executed until August, 1969, defendants insist that Sisters has not proved the tax-exempt status of the property for 1969. Though the record does not extensively cover this issue, the evidence does show that аs of January 1, 1969, the portion of the property in question was occupied by Rock Valley College under a lease with Sisters. The use of this property for school purposes supports the trial court‘s determination that it had a tax-exempt status for 1969.
Judgment affirmed.
MR. JUSTICE DAVIS, dissenting:
I cannot agree with the opinion of the majority of the court in this case. To continue the tax-exempt status of property owned by rеligious corporations even though the use of that property is no longer that to which the property was originally dedicated, and for which it was granted its tax-exempt status, can be justified only if the statutory language granting such exemption clearly encompasses the new use of the property. In the case at bar, it does not. The majority has extended tax-exempt status to property owned, but not used by a religious corporation. This is not justified by the controlling constitutional and statutory provisions.
The problem is largely one of statutory construction. Section 3 of article IX of the constitution of 1870 provides that property used for school, religious, cemetery and charitable purposes may be exempted from taxation, but only by general law. Section 19.2 of the Revenue Act of 1939 (
Tax exemption statutes must be strictly construed and all doubts resolved against an exemption. People ex rel. Marsters v. Rev. Saletyni Missionaries, Inc. (1951), 409 Ill. 370, 375; People ex rel. Lloyd v. University of Illinois (1934), 357 Ill. 369, 376. The majority opinion recognizes that doubt exists as to whether the property owned by the Sisters is entitled to an exemption by conceding that the
The words of section 19.2—“with a view to profit“—have beеn interpreted by this court as modifying the words “leased” and “used“, so that property of a religious corporation used exclusively for religious purposes is exempt from taxation under the statute unless such property is leased by such corporation or otherwise used with a view to profit. People ex rel. Hesterman v. North Central College (1929), 336 Ill. 263.
The cases cited by the plaintiff Center—People ex rel. Goodman v. University of Illinois Foundation (1944), 388 Ill. 363, and People ex rel. Hesterman v. North Central College, (1929), 336 Ill. 263—can be distinguished factually. Both the University of Illinois and North Central College continued to conduct their schools, for valid and tax-exempt educational purposes, while the leases involved where in effect. Hеre, however, the Sisters had terminated the religious use of their building prior to, and during the life of the lease to the Center, and its nonreligious use of the property did not entitle the Sisters to a tax-exempt status, as did the continued educational use in the casе of the university and college. The majority observes this factor, yet fails to draw therefrom the necessary conclusion which it imparts. Since the lease does not serve the tax-exempt purpose of the institution, that purpose having terminated, the lease, necessarily, is one for profit.
Under the pertinent constitutional, and statutory provisions, there is a material difference between the actual and exclusive use of property for a religious purpose and the applicаtion to the same purpose of the income derived from tenants who occupy the property, and this court has held that it is immaterial whether the owner actually makes a profit or sustains a loss by virtue of the letting. Turnverein “Lincoln” v. Board of Appeals (1934), 358 Ill. 135, 144. Under this view, it is evident that the property lost its tax-exempt status when the exclusive
The majority notes that it is the primary use of the land which determines the tax-exempt status of the property. I agree with this proposition, but the majority has added to it a new and unwarranted dimension, i.e., that the primary use is that to which the property is put after leasing. Cleаrly, this is a secondary use. The lease itself establishes the use by the Center as secondary. The primary use of the property by the Sisters was religious; under the lease the property ceased to be used for this purpose and it was rented to the Center for profit. Under such use, the Sisters no longer should enjoy a tax-exempt status. The majority‘s decision, in effect, has exempted from taxation funds earned by a religious corporation from property let for the production of income. This violates the provisions of section 19.2 of the Revenue Act of 1939.
I would deny the tax exemption.