Exelon Corp. v. Department of Revenue

266 them); court admitted properly

less error because trial Patterson, (same); Case, 218 Ill. 3d App. 154 Ill. 2d at 447 Brown, 374, (same); accord v. 229 Ill. 2d People at 159 (2008) error, no “we need not consider (finding 392 argument”). State’s harmless-error Further, court did not address all of the appellate it considered defendant on because appeal issues raised 3d at 544. App. issue 376 Ill. suppression dispositive. Therefore, remand the cause to the court appellate we remaining contentions. for consideration of defendant’s (2005); Collins, 206, See, v. e.g., People (2004). 69, 213 Ill. 2d People Rosenberg, v.

III. CONCLUSION reasons, appel- foregoing judgment For the reversed, remanded to the ap- court is and the cause late court for further pellate proceedings. and remanded.

Reversed (No. 105582 . v. THE DE CORPORATION, Appellant,

EXELON al., et Appellees. OF REVENUE PARTMENT upon February denial Opinion 2009 . Modified filed rehearing July 2009. Wills, Trueblood, D. Levenstam, Amy K. Amy Barry LLP, of & Block Otterberg, A. of Jenner April appellant. Chicago, General, Springfield Attorney Madigan,

Lisa Berks, (Michael General, and Paul Scodro, Solicitor A. counsel), for General, Chicago, Attorney Assistant appellees. judgment delivered the

JUSTICE FREEMAN court, opinion. with Kilbride, Fitzgerald

Chief Justice and Justices Gar- man, and Karmeier concurred in the judgment opinion. concurred,

Justice Thomas with specially opinion. Justice Thomas also dissented denial of rehear- upon ing, with opinion.

Justice part Burke took no the decision.

OPINION Plaintiff, Exelon Corporation, as successor to Unicom Corporation, filed a in the circuit court complaint of Cook County seeking administrative review of a decision the Department of Revenue (Department). Depart The ment denied plaintiffs replacement claim for tax invest 201(e) ment credits provided by section of the Illinois (35 5/201(e) (West 1994)). Income Tax Act ILCS circuit court confirmed the Department’s decision, and the appellate court affirmed. Ill. App. 3d 918. al We (210 lowed plaintiffs petition for leave to appeal Ill. 2d 315(a)). R.

I. BACKGROUND The facts are undisputed. Edison Commonwealth (ComEd) wholly was a owned subsidiary of Unicom Corporation. During 1995 and years ComEd was a public utility company in the principally engaged production, purchase, transmission, distribution and sale of electricity. During those years, bought nearly ComEd billion property generating, $3 it used for transmitting, and distributing electricity to its custom- ers.

Unicom filed a combined 1995 and 1996 Illinois tax return. Unicom was “personal liable for the tax property 201(c) replacement income imposed by tax” section (c) (West Income Tax Act. See 35 Illinois ILCS 5/201 1994). returns, in which it timely Unicom filed amended this tax against liability claimed investment credits 201(e) section of the Income Tax Act. Sec- provided by 201(e) in a tax credit for investments provides tion others, used in Illinois retailers. The property by, among “the sale of “retailing” tangible section defines as conjunction rendered in or services personal property or commodi- goods with the sale of consumer 5/201(e) 1994). Unicom claimed ties.” See 35 ILCS West 201(e) $10,419,507 for and a section credit of 201(e) $4,398,115 credit of for 1996. claimed a section The denied both claims. Department and protest requested filed an administrative

Unicom Unicom filed cross- a The and hearing. Department The sole summary judgment. disputed point motions for “retailing” was engaged of law was whether Unicom 201(e). contended defined section as because it did engaged retailing that Unicom was not sold but rather “tangible personal property,” not sell Unicom contended electricity, intangible. which was property” required “tangible personal affidavit attached to its motion an the statute. Unicom witness, Fajans, Joel its Dr. report expert from California, University at the professor physics of irrefut- that “as a matter Fajans opined Dr. Berkeley. fact, and material” physical scientific able stored, obeys physical because it can be measured felt, and seen.” laws, and “can be tasted the Department’s further contended Unicom 201(e) uniformity violated the the section credit denial of (Ill. 1970, art. Const. clause of the Illinois Constitution §2). the Department’s claimed that it was IX, Unicom utility gas to natural such tax credits policy grant Unicom companies. utility but not to electric companies possible justification was no there argued 271 and electric utilities discriminating gas between natural 201(e). object based on the of section purposes (ALJ) Judge The Administrative Law recommended in favor of the granting summary judgment Department. accepted Depart The ALJ’s written recommendation rebuttal of arguments, any ment’s which did not include Fajans’ expert opinion. Relying Dr. on this court’s deci (1957), Halpin, sion Farrand Coal Co. v. 10 Ill. 2d 507 the ALJ concluded that the General did not Assembly intend to include electricity meaning within the “tangible when personal property” enacting section 201(e). Also, the ALJ accepted Department’s argu ment to the clause. The ALJ pertaining uniformity concluded: is a real “[TJhere and substantial difference in the persons available, classes of the credit is whom and that this difference is related to Illinois’ longstand ing public policy treating [sic] for tax differently, purposes, persons who sell tangible personal property versus persons who do not.” The Director of Revenue ac cepted the ALJ’s recommendation.

Unicom filed a complaint administrative review of the Department’s decision. Exelon thereafter succeeded Unicom. The circuit court substituted Exelon for Unicom in the case caption, and confirmed the deci- Department’s sion.

The appellate court upheld the circuit court’s confir mation of the Department’s decision. Ill. App. 918. The appellate court viewed this court’s Farrand Coal decision as dispositive of the case and concluded it was “bound by the of stare principle decisis must adhere to the supreme decisions of our court.” 376 Ill. 3d at App. that, 922. The court appellate held as a law, matter of Exelon engage did not in the sale of “tangible personal property” required by section 201(e) of the Income Tax Act. 376 Ill. 3d at 921-23. App. Also, appellate court rejected Exelon’s uniformity Exelon ap Ill. 3d at 923-27. challenge. App.

clause to this court. peals

II. ANALYSIS A. Standard of Review judicial Act review provides The Income Tax be in accordance with decisions Department’s (735 et seq. Review Law ILCS Administrative 5/3 —101 (West 1994). (West 1994)). In a case aris 35 ILCS 5/1201 Law, Administrative Review we review ing under the not the determina agency, of the administrative decision Chicago court. v. North City tion of the circuit Wade 485, (2007); Mar Board, 504 Police Pension Board, Ill. 2d Pension 225 Chicago Heights v. Police coni (2006). 497, 531 judicial Law provides

The Administrative Review fact presented of law and questions review extends to all (West 1994). ILCS the entire record. 735 5/3 —110 on whether depends standard of review proper law, mixed fact, one of or a is one of question presented Village Stickney law. Cinkus v. of fact and question of 200, 210 Board, 228 Ill. 2d Electoral Municipal Officers Schiller, 221 District 159 v. (2008); School Elementary (2006). judicial limits 130, 142 The Review Law Ill. 2d not record; may the court the administrative review to additionally The statute or additional evidence. hear new of the and conclusions “findings mandates held fact shall be questions on of agency administrative and correct.” 735 ILCS facie true prima to be 5/3 —110 (West 1994). an a court reviews when Accordingly, not findings, it will factual agency’s administrative for that its judgment evidence or substitute reweigh the Rather, only will ascertain the court agency. manifest are against of fact findings such whether State, American Federation of the evidence. weight of Illinois 31 v. Council Municipal Employees, & County

273 Board, 569, Panel, 216 Ill. 2d State Labor Relations State Solutions, (2005); Inc. v. Comprehensive Community 577 205, 455, School District No. 216 Ill. 2d 471-72 Rockford (2005). contrast, agency’s question In an conclusion on a State, of law is reviewed de novo. American Federation of 577; 216 Ill. 2d Municipal City & at County Employees, Board, 181 Belvidere v. Illinois State Labor Relations (1998). 191, Ill. 2d 205

A asks the effect question legal mixed of fact and law Cinkus, 211; of a set of facts. 228 Ill. 2d at given Compre Solutions, hensive 2d at Mixed Community Ill. 472. “ questions ‘questions of fact law are which the established, historical are facts admitted or the rule of law undisputed, the issue is whether the facts satisfy standard, the statutory or to it another put way, whether the rule of law as to the applied established facts is or is ” State, not violated.’ American Federation & County 577, Municipal Employees, 216 Ill. 2d at Pullman- quoting Swint, 273, n.19, Standard v. 456 U.S. 72 L. Ed. 2d (1982). n.19, 102 S. An agency’s Ct. 1790 n.19 conclusion on a mixed question fact and law is reviewed for clear error. An clearly administrative decision is er roneous when the reviewing court is left with the definite and firm conviction that a mistake has been committed. State, American Federation & County Municipal Em ployees, 216 Ill. 2d at 577-78. Pullman-Standard,

Unlike where the rule of law was undisputed, this case presents solely questions of law. The Department and the appellate court each considered itself bound by tangential this court’s discussion of the physical properties Farrand Coal Co. v. (1957). 2d Halpin, 10 Ill. 507 In determining whether and to what extent Farrand Coal controls the outcome of present case, this court the power duty has and the to reexamine the authorities and legal concepts invoked in that opinion. Fox, 106, See v. 2d 111 Bradley 7 Ill.

274

(1955). of our explained, every aspect analysis As will be 201(e) of the Income Tax Act. construing involves section is de novo. This is a of law and our review pure question Protec See, Envirite v. Illinois Environmental e.g., Corp. (1994). 210, 214 158 Ill. 2d Agency, tion Merits B. The court, it qualifies Before this Exelon contends 201(e) tax credit because it falls within for the section alternatively of the statute. Exelon contends the terms 201(e) violates the denial of the section tax credit (Ill. the Illinois Const. uniformity clause of Constitution §2). IX, this court 1970, quite art. It is established that are unneces will not address constitutional issues E.H., See, In re e.g., for the of the case. sary disposition cases). (2006) 172, As the (collecting 224 Ill. 2d 178 in its motion for sum correctly observed Department court, if and at oral before mary judgment argument 201(e) tax credit as a for the section qualifies Exelon construction, no reason then there is statutory matter of See, e.g., issue. to reach the alternative constitutional 212 2d Ill. System, Mattis v. Universities Retirement State (2004); v. Electoral 58, Bonaguro County 74-75 Officers (1994). 391, Board, 158 Ill. 2d Property” Personal “Tangible

1. for the sec qualifies Exelon To determine whether 201(e) credit, analysis. in a two-tier engage tax we tion 201(e) itself to determine First, we section analyze Second, determine whether we boundaries of the statute. 201(e) Van’s case. See particular in this applies section Revenue, Ill. 2d Co. v. Department Material v. (1989); Corp. Zenith Electronics 201-02 (1997). Revenue, App. is to construction statutory rule of

The fundamental A court’s of the legislature. intention effect to the give statute, which is language begins with analysis

275 the best indication of intent. Where the statu legislative is clear and the court must tory language unambiguous, it effect without resort to other tools of give interpreta statute, construing tion. In a it is never for a proper court to from into the depart plain language by reading limitations, statute or conditions that conflict exceptions, clearly expressed with the intent. legislative County of L.L.C., Knox ex rel. Highlands, Masterson v. The 546, (1999); Co., 2d Davis v. Toshiba Machine (1999). America, 186 Ill. 2d 184-85 Absent statutory intent, definitions a different indicating legislative words in a statute given ordinary are to be their and popularly meaning. understood To ascertain the ordinary words, popular meaning of this court sometimes uses the dictionary as a People resource. ex rel. v. Datacom Daley Systems Corp., (1991); 146 Ill. 2d see Gem Electron Monmouth, ics Inc. v. Department Revenue, 183 Ill. of 470, (1998). 477-78 a Construing statute is a pure question of law and our review is de novo. Belvi City of dere, 181 Ill. 2d at 205. 201(c)

Section of the Income imposes Tax Act a “personal property replacement tax income tax” on “the privilege of earning or income” in receiving Illinois. 35 5/201(c) (West 1994). 201(e) ILCS Section provides credit against personal property replacement income tax for investments in “qualified property.” 35 ILCS 5/201(e) (West 1994). The statute defines “qualified property,” in pertinent part, as property “used Illinois by a who is taxpayer primarily engaged in manufactur- ing, fluorite, coal or mining or in retailing.” 35 5/201(e)(2)(D) (West 1994). ILCS lastly This section provides: “For purposes (e), of this subsection the term ‘retailing’ means the sale of tangible personal property or services rendered in with conjunction the sale of tangible consumer goods or commodities.” 35 ILCS 5/201(e)(3) (West 1994). The issue in this case is whether so, If then “tangible personal property.” “retail-

Exelon’s business of constitutes selling electricity 201(e), thereby qualifying as defined section ing” does not Exelon for the tax credit. The Income Tax Act “tangible personal property.” define the term court considered appellate and the Department of dispositive in Farrand Coal to be analysis this court’s 201(e) tax credit. In Farrand Exelon’s claim for a section Coal, meaning phrase this court considered the Retail in the context of the “tangible personal property” (Ill. 120, 1955, ch. par. Tax Act Rev. Stat. Occupation ers’ Tax Act at that Occupation 440 et In the Retailers’ seq.). us, time, legislature as in the Income Tax Act before “retail” to define the term “tangible” used the word Assuming that the “tangible.” without the word defining this court meaning, their ordinary popular words had Webster’s, as: “tangible” to which defined referred “ also, touched; perceptible to the ‘Capable being of touch; tactile; palpable.’ [Citation.] of the term dictionary gives the law definition

The same real or ‘Corporeal property either ‘tangible property’ as meaning ‘Ofthe nature ‘corporeal’as personal’ and defines to, of, of, matter or a material consisting pertaining or or bodily; material; opposed spiritual to body; physical; — ” *** (Emphases omit Tangible palpable.’ or immaterial ted.) 511, Coal, quoting Farrand 10 Ill. 2d at Webster’s 1946). (2d Dictionary ed. International New “tangible.” definition of This court has adhered to this v. Department Bank Springfield See First National of of (1981). with the Revenue, agrees 2d 88 Exelon this definition court that appellate and the Department 201(e). construing be used in section should “tangible” Depart- neither the However, Exelon contends that tier of the second court conducted appellate ment nor the Material, which in Van’s this court described analysis of this to the facts “tangible” definition of applies Exelon, Rather, according case. Coal in concluding, court relied on Farrand appellate law, tangible personal

as a matter of is not Indeed, court observed that was property. appellate of stare decisis and must adhere principle “bound App. to the decisions of our court.” 376 Ill. 3d supreme at 922. Exelon error to this Exelon assigns conclusion. argues that Farrand Coal concerned the tangibility coal, electricity, not and that this court’s few comments regarding electricity were dicta.

Obiter dictum refers to a remark or expression aside, opinion generally that a court uttered as an and is binding authority not or within the stare deci precedent Cates, (1993); sis rule. Cates v. Depart Ill. Buildings Co., ment Public Works & v. Butler 13 Ill. 2d (1958). 537, 545 fully As more stated: “A dictum is ‘any statement made a court use in argument, illustra tion, analogy remark, aside, It suggestion. is a an concerning some rule of law or legal proposition not necessarily essential to the decision and lacks the ” authority adjudication.’ of United States v. Crawley, (7th 291, 1988), 837 F.2d Stover, Cir. quoting Stover v. (1984). 470, 476, 783, 60 Md. App. 483 A.2d There are several indications that a particular statement or passage in a prior opinion may be dictum: passage unnecessary

“One is that the was to the outcome of the earlier case perhaps fully and therefore not as considered as it would have been if it were essential to the closely outcome. A passage related reason is that the not an integral part opinion of the earlier can be —it sloughed damaging analytical off without the structure of the opinion, part and so it was a redundant opinion and, again, may fully not have Crawley, been considered.” 837 F.2dat 292. (2006)

See People Young, 753, v. App. 770-71 contrast, In (citing Crawley). “an expression opinion upon point a in a case argued by counsel and deliberately court, passed upon by the not essential to the though cause, dictum, if is a dictum. judicial disposition further, entitled to judicial And dictum is [Citations.] much should be followed unless found to be weight, and added.) Cates, 156 Ill. 2d at 80. (Emphasis erroneous.” Exelon that this court’s references to the agree We with in Farrand Coal were obiter dicta. tangibility Coal, at company In Farrand coal plaintiff under the imposed to avoid sales tax tempted paying to the Tax Act on the sale of coal Occupation Retailers’ utility an electric city Springfield, operated which tax under paid The coal the sales company. company Revenue enjoin the Director of protest sought The circuit court dismissed collecting payments. from ap and the coal company’s complaint, company the coal Coal, The tax was Farrand 10 Ill. 2d at 507-08. pealed. “ to a ‘tangible personal property on a sale of payable and not for resale consumption for use or purchaser, ” Coal, Farrand tangible personal property.’ form as any 120, par. Ill. Rev. Stat. ch. quoting 10 Ill. 2d at as a its sale of coal company 440. The coal characterized argued to sales tax. It subject sale for resale not itself, but rather was not the coal actually what it sold coal, the electric stored in the “energy” in the coal to convert it to “energy” utility bought alleged company and resell it. The coal “energy” electric energy is the same utility “that sold energy energy; into electrical form purchased, though changed ingredient constitutes an in the coal energy energy.” Farrand or material of the electrical constituent Coal, 10 Ill. 2d at 508. in Farrand presented

This court viewed the issue Coal as follows: case determining in this issue to be resolved

“The basic whether, as coal is sold question, under the act is utility consump- for use personal property to the the measure of a is therefore and not for resale and tion sale, energy, tangible personal taxable retail or whether coal, therefrom, property, bought is in the form of extracted processed tangible personal property and resold as added.) energy.” (Emphases form of electrical Farrand Coal, Ill. at 509-10.

This court made clear that the coal coal was company’s the focus of the case and not the electric company’s electricity: patently plaintiff engaged

“It seems clear that is in the selling business of coal to utilities. Such coal constitutes tangible personal property popular meaning within the question. that term as used in the act in The coal is used by utility generate by electrical energy. Such use burning burned, or combustion of the coal. When gone coal is except for the ash residue. It is difficult to perceive how complete there could be a more use or consumption of the meaning coal within the of the act. Clearly plaintiff coal company tangible personal has sold property utility to the consumption.” (Emphases use or added.) Coal, Farrand 10 Ill. 2d at 513. This the dispositive reasoning Farrand Coal. Indeed, affirming court, the circuit this court held: “Coal was sold as tangible personal to the property utility for use or and not consumption for resale within the mean ing of the Retailers’ Tax Act Occupation and is therefore added.) the measure of a taxable retail (Emphasis sale.” Coal, Farrand Coal, Ill. 2d at 513. In Farrand court never had to—and never did—address definitively the issue of whether electricity tangible.

The Department characterizes this view of Farrand Coal as “myopic.” argues “whether electricity was tangible personal property was critical to the plaintiffs Coal, case.” In Farrand the coal company included in its contention the following allegation and reasoning: energy

“that the purchased by utility and also the energy utility electrical sold are both tangible personal property; energy that since the purchased energy the same

utility tangible personal property and customers, energy is not by utility resold to its Coal, by utility.” 10 Ill. 2d used or consumed Farrand at 508.

Therefore, the sale of according company, to the coal subject to the electric was not to sales “energy” utility Coal, 10 Ill. 2d 508-09. tax. Farrand at rejected compa- The court in Farrand Coal the coal The court observed: ny’s arguments. appears although energy that and

“From the evidence indestructible, interrelated, closely equivalent, mass are may directly proportional to and be interchangeable, other, be yet energy each as such cannot equated with stored, weighed, matter and separated from mass or solidified, handled, photographed, transported, liquified, senses in its own perceived touched or otherwise or matter. capacity separate apart or from mass right subject, including All who testified on the witnesses witnesses, energy sepa cannot be plaintiffs agreed that physically otherwise tagged rated from matter and any way, spatially, located and does identified in cannot be falls short respects energy In all these not have dimensions. ordinary understood mean fitting popularly into the Assembly as used the General ing ‘tangible’ of the word Coal, at 511. Farrand 10 Ill. 2d question.” in the act focusing its on analysis by This court then concluded electricity. tangibility of coal and not the consumption Coal, 2d at 513. Farrand 10 Ill.

However, this court passage, in a three-paragraph of its observation support also recounted several cases to be electricity no time held the court had “at Coal, at Farrand ‘tangible’ personal property.” this court obiter dicta. Since passage 512. This was was energy company’s argument the coal rejected did no need to—and coal, in the the court had “trapped” is “tan electricity consider whether deliberately not — & Coke Light refers to Gas Peoples gible.” passage court (1934), in which this Ames, Ill. 152 Co. v. concluded that a “decision as to whether or not electric was was declined ity tangible personal property expressly unnecessary disposition to a of the case.” Farrand Coal, 10 Ill. 2d at 512. This court mentioned specifically (1937), in People Menagas, v. 367 Ill. 330 which this court and, therefore, held was personal property object larceny could be the under the Criminal Code. The State “conceded” intangible 332-33), (Menagas, 367 Ill. at and the court so assumed 338). 367 Ill. at (Menagas, acknowledgment of an as sumption holding. does not constitute a See 20 Am. Jur. (2005) §134, 2d Courts at 517 (stating “a case is not binding precedent on a of law where the point holding is only or assumed in the decision implicit but is not an nounced”). Lastly, passage refers to People ex rel. Mercer v. Wyanet Light Co., (1922), Electric 306 Ill. 377 in which this court held that “electric utility companies are neither manufacturing nor mercantile companies so as to capital have their stock locally assessed instead of State assessing authority.” Coal, Farrand 10 Ill. Indeed, 2d at 512. this holding actually comports with modern, our common understanding of electric utility companies. An utility electric company purely not a manufacturing company. Rather, mercantile it belongs to that unique class of corporations known as utili public ties. Wyanet Light, 380-81; 306 at Hyman, Ill. see L. A. Hyman & R. Hyman, Past, America’s Electric Utilities: (7th 2000) Present and Future 89 ed. that an (explaining electricity supplier must perform following functions to deliver the product: production, transmis marketing, sion, distribution, metering billing, and retail sup ply). reject

We the argument that this court’s discussion of electricity in beyond Farrand Coal was mere obiter dicta. The above-referenced language in Farrand Coal was overly broad and not to its necessary holding. This three-

282 to the clearly unnecessary was

paragraph passage in that it can outcome of Farrand Coal. It was redundant structure sloughed damaging analytical be off without Further, the See 837 F.2d at 292. opinion. Crawley, of the judicial in Coal was not dictum. Farrand passage briefed, this court did not this issue was Although Cates, See at deliberately upon point. rule Rather, uttered as an aside. See passage 80. Works, 13 Ill. 2d at 545. Public Department of of last “Even obiter dictum of court Of course: and therefore be tantamount to a decision resort can of that contrary in the absence of a decision binding Therefore, case, Cates, Ill. 2d at 80. court.” court to consider itself appellate was reasonable for the tangibility bound this court’s discussion Ill. 3d at 922. App. in Farrand Coal. 376 lacks statu- However, construing legislation the laws of definitions, ignore this court cannot tory See, them. to understand humanity has come physics 169, A.2d Kahl, v. 366 Md. Marzullo e.g., (2001) “do not set aside com- (observing that courts construing sense when and common experience mon statutes”). decision, acknowledged the ALJ

In his recommended of electric- disputes properties that “neither party the unre- case contains present The record ity.” entitled “The Fajans, of Dr. report butted affidavit and electricity He defined Electricity.” of Physical Nature explained: Dr. Fajans in a circuit. the flow of electrons because, microscopi- and material “Electricity physical is a material and ‘pressure’ of the flow cally, it consists be electrons, can macroscopically, and namely entity, measured, seen, heard), weighed, (felt, tasted, and sensed nature.” laws of stored, is to universal subject and and as follows: elaborated Fajans Dr. electrons, electricity be transmitted. cannot

“Without very light- Though electrons themselves are small matter; they weight, are one of the basic constituents of electrons, hydrogen common matter like or ion consists of protons, roughly equal Recently, and neutrons in number. electrons, precisely, scientists have been able to see or more density electrons, Scanning with devices called Tun- *** neling nothing is Microscopes. physical There more and material than an electron. Since itself object, electricity physi- consists of the flow of a material cal and material.”

Dr. further Fajans explained can be felt: electricity every you get

“You feel time shock. Static shocks, things walking carpet dry from like across a on a day, annoying, always are but almost harmless. Electrical sensations from power range vibratory lines from the feel- ing you may experience gently your while running fingertips improperly over an lamp, tingling wired to the you feeling get you if touch the wires inside an electri- dry hands, cal twitch, outlet with strong pain to the you get touching hands, weakness from an outlet with wet pain extreme in more dangerous circumstances.” As a sister court observed: “The word ‘intangible’ from its Latin roots means something that cannot be touched perceived by touch. [Webster’s Third New Interna (1993).] tional Dictionary 1173 touched, can Electricity be and when a person does so and thereby completes an circuit, electrical it may be the last earthly sensation he or she feels.” Utilicorp Revenue, United Inc. v. Director of (Mo. 2001). 75 S.W.3d 728 n.6 Fajans’ report Dr. reflects the currently understood electron theory electricity. See, e.g., Hyman, L. A. & Hyman Hyman, R. Past, America’s Electric Utilities: Present and Future (7th 2000); Gibilisco, 15-19 ed. see generally S. Teach (4th 2006) Yourself Electricity and Electronics ed. “It (explaining: important to understand some simple general physics principles in order to have a full grasp

284 Herman, electronics”); S. Delmar’s

electricity Bodanis, (1993); D. Electricity Standard Textbook of Story Universe: The True of Electric- Shocking Electric (2005) electricity from (tracing understanding ity electrons). flowing force to mysterious regarding in Farrand Coal This court’s dicta based on our scientific electricity tangibility century ago by half a and was skewed knowledge of over Our current in that case. presented the true issue beyond has understanding electricity progressed alternative statu- time. need not address the parties’ We the several arguments. join construction We now tory varying held in contexts expressly courts that have See, property.” electricity “tangible personal constitutes Inc. v. State Operations, Minerals e.g., Valley Searles 514, 521, 4th 72 App. 160 Cal. Equalization, Board of Co. 857, (2008); Narragansett Electric Rptr. 3d 862 Cal. (R.I. 2006); v. Carbone, 87, Davis v. 898 A.2d 97-98 Gulf (Fla. 298, App. Dist. Ct. So. 2d 300 Corp., Power 799 53, 59-60, 8 Co., 243 Ala. 2001); v. Alabama Power Curry (1942).1 2d So. “Retailing”? Primarily Engaged

2. Is Exelon “tangible if parties agree engaged would be then Exelon personal property,” 201(e). have held section We “retailing” as defined and, ac- property” “tangible personal as defined sec- Exelon is a retailer cordingly, hold that “tangible personal property” in section 1Our construction 201(e) on our current understand Income Tax Act is based course, As electricity. the General tangibility of Of ing of the electricity as it include or exclude sembly may define this term to term, statutory legislature particular defines a chooses. Where long as it is reasonable. by the definition as a court is bound McGaw, Pipeline v. Service Co. Texaco-Cities (1998). 201(e).

tion The second tier of the described in analysis Van’s Material concerns whether Exelon satisfies the 201(e) for a section tax credit. statutory requirements Material, parties See Van’s 131 Ill. 2d at 201-02. The chose to Exelon’s claim means of cross-motions litigate for that no summary judgment, by they agree which presents only factual issues exist and that the case See, need to resolve the issue. Board Trustees legal e.g., of Southern Illinois v. Human University Department Rights, 206, (1994); 159 Ill. 2d 210 Allen v. 14 Ill. Meyer, (1958). 284, 2d Accordingly, 292 our determination issue is legal conclusive. In its petition rehearing, asks us our to render modify opinion only prospective to incurred, taxes or tax credits for tax sought, periods after filing of this opinion. Generally, judicial decisions are given retroactive as well as prospective effect. Deich Comm’n, mueller Construction Co. v. Industrial (1992). 413, However, this court has the inherent power to conclude a decision will not apply retroac but tively, only Deichmueller, prospectively. 151 Ill. 2d at (1987). 416; Elg v. Whittington, 119 Ill. 2d 356-57 a Whether decision will be applied only prospectively will (1) depend on whether: the decision establishes a new law, principle of either by overruling past precedent on which litigants may relied, have or by deciding an issue of first impression whose resolution was not clearly (2) foreshadowed; its given purpose history, or operation decision’s will be impeded promoted by or (3) prospective retroactive application; balance of the mandates equities prospective application. Bogseth Emmanuel, v. (1995); Deichmueller, 166 Ill. 2d 417-18; 151 Ill. 2d at Elg, 119 Ill. 2d at Considering 357. facts, these factors in light the instant we limit our to an holding entirely prospective application. deciding impression

First, issue of first we are an clearly not foreseen. Albeit in where the resolution was language dicta, in Farrand obiter the above-discussed intangible. suggested that Coal application Second, of our decision is not retroactive purpose. purpose necessary of our to advance its legal meaning holding of the is to ensure that the default property” “tangible personal statutory phrase cor meaning. Prospec popularly responds understood to its holding application promotes purpose of our tive Assembly expressly allowing its to declare the General phrase “tangible if include it uses intent to personal property” Ill. 2d at 284

in the future. See 234 n.1. equities favors

Third, likewise a balance entirely prospective. rendering Retroactive this decision uncertainty application cause of this decision could general applied Exelon. and as to state tax law entirely limiting prospec Conversely, to an this decision legislature provide application permits direc tive statutory phrase “tangible meaning of the tion on the personal property.” Therefore, that this decision we hold apply only prospectively incurred, tax to taxes will year sought, See, 2009 and thereafter. for the tax credits Sycamore Bogseth, e.g., 515-17; v. 2d at Gilbert 166 Ill. (1993). Hospital, Municipal 511, 156 Ill. 2d 529-30 this court that constitu the mandate of “It remains only may the case not when tional issues be considered Mulay grounds.” v. decided on nonconstitutional be (2007). disposition Mulay, of this 601, Our 611 whether the need to determine cause obviates the uniformity Illinois clause of the violated §2). (Ill. e.g., See, IX, art. Const. Constitution Dawdy Co., Ill. 2d 185 R.R. v. Union Pacific (2003);Bonaguro, Ill. 2d at 399.

III. CONCLUSION disagree We with the court’s conclusion that appellate did engage Exelon not in the sale of “tangible personal 201(e) property” purposes of section of the Income However, Tax Act. holding because our is to be applied prospectively only, we affirm the judgment appel- late court.

Affirmed. JUSTICE BURKE took no in the part consideration or decision of this case. THOMAS, specially

JUSTICE concurring: My colleagues are convinced that firmly they have the science of this issue correct. Unfortunately, science does not answer the question court, before the and the majority has its history and its law wrong. Consequently, I join cannot its opinion.

Two fundamental misunderstandings underlie and inform the majority opinion. The first is the mistaken belief that question central we must resolve is whether a majority of this court believes that electricity is tangible at the subatomic level and not whether legislature intended to include within meaning “tangible personal property” when it enacted the tax credit in question. The Department has correctly and persuasively argued that the legislature could not have so intended. The second is a misunderstanding Farrand Coal so profound that the majority can cast aside as obiter dicta this court’s discussion of an issue (a) (b) that case; central to the plaintiff’s in litigated (c) court; the trial fully argued briefed and on ap- I peal. will demonstrate below that such a is not position only indefensible but directly contrary to this court’s precedents. After demonstrating why Farrand Coal’s discussion of the tangibility electricity was not obiter why not abandon

dicta, I will set forth both we should doing why majority’s reasons for Coal and Farrand wholly invalid. so are DICTA

I. OBITER Holding? A. Dicta or majority correctly forth the distinction The sets judicial In Cates v. obiter dictum and dictum. between (1993), explained court Cates, Ill. 2d this opinion expression is a “remark or obiter dictum binding generally aside, and is not a court uttered as an authority precedent rule.”2 within the stare decicis expression hand, “On the other an 234 Ill. opinion upon at 277. argued by point counsel and in a case though deliberately passed upon by court, not es disposition dictum, cause, if is a sential to judicial Cates, 2d at 80. Because obiter dictum.” rule, the distinction dicta lies outside the stare decisis important judicial dicta is an dicta and between obiter judicial hand, dicta has the other because one. On judicial much is entitled to of a determination and force weight (Cates, 80), the distinction between 156 Ill. 2d at important. holding judicial is less and a of the court dicta gives majority, however, insufficient consider- The opinions may not be consid- discussions in ation to what good summary appears place. first A ered dicta Corpus Juris Secundum: pre- the issues adjudication any point on within

“An applies as to all is not dictum. This rule sented a case agrees Exelon that with 2The states electricity in Farrand Coal tangibility to the court’s references noted, be however 2d at 278. It should obiter dicta. 234 Ill. were not state generic and did merely term dicta Exelon used the responded by was obiter dicta. that the discussion was, that, dicta, if it but even was not arguing that the discussion judicial it was dicta. they only

pertinent questions, although might be inciden- involved, in the tally presented which are and decided case, of the and lead to regular course of the consideration conclusion, any statement in the opinion the final and to predicated. as to a matter on which the decision is Accord- ingly, point expressly decided does not lose its value as a precedent disposition might because the of the case is or Similarly, have if ground. been made on some other a case presents points, any two or more one of which is determina- issue, actually tive of the ultimate but the court decides all them, every precedent case is an authoritative on decided, point may and none of points regarded be point authority merely dictum. One should not be denied point fully argued because another was more and consid- ered, nor does a proposition decision on one make state- regarding propositions ments of court other dicta.” 21 (2006). §229, C.J.S. Courts at 227 now turn to Far- mind, With these in let us principles rand Coal’s discussion of the tangibility electricity. Farrand Coal was the desire of the

At issue plaintiff company coal not to pay retailers’ occupa tion tax. The coal company being was taxed on its sales of coal to an utility. electric The tax in question was imposed “upon persons engaged the business of sell ing tangible personal to property purchasers for use or Coal, See Farrand consumption.” 10 Ill. 2d at 510. The statute defined “sale at retail” as “any transfer of, ownership to, or title tangible personal property to a and not resale in purchaser, for use or consumption for any as tangible personal property.” (Emphasis form added.) 1955, 120, Ill. Rev. Stat. ch. par. 440. statute that, further provided “Sales of tangible personal which property, property as an ingredient constituent goes into and forms a part tangible personal property retail’, subsequently subject a ‘sale at are not sales added.) at retail as defined in this Act.” (Emphasis Ill. Rev. Stat. par. ch. 440. The position of the was that the coal company selling (coal) utility to the electric property personal and, required it was consumption, consequently, use or it was company argued the tax. The coal pay excep- the tax under the statute’s exempt paying from resold property pur- tion for tangible personal in the company argued energy The coal that the chaser. utility the as utility it sold to the was resold coal that In energy. its brief personal property tangible —electric Coal, summarized what in Farrand the to necessary company prevail: would be for coal First, it must be determined: plaintiff prevail, “For the to second, that tangible personal property; is energy merely energy is a modifiedform of which energy electrical coal, been extracted from the and proved can be to have utility and its custom- third that the transaction betweenthe energy tangiblepersonal actually is a sale electrical as ers of and service property merely selling of the work and not and furnish. energy perform the electrical can which (not all, any but establish one plaintiff Failure one) plaintiff’s defeat the whole any points of these will neces- decision in the defendants’ favor case and make a added.) Coal, brief Farrand defendant’s sary.” (Emphasis at 61. and the defendants plaintiff both the

Consequently, on the issues of testimony scientific extensive presented electricity tangible personal and are energy whether an associ included experts plaintiff property. a Ph.D. University, from Purdue ate of professor physics at the for nuclear studies in the institute physics from professor second Chicago, physics of University superinten Chicago, general and University graduate engineering who was an utility, dent for the a professor witnesses included Purdue. The defense from professor Illinois and a University of from the physics Washington from engineering metallurgical and mining The scientific Coal, 10 Ill. 2d at 509. Farrand University. Far- days. two full part covered the better testimony Coal, rand 10 Ill. 2d at 509. The and the plaintiff (1) defendants as to disagreed energy whether: electrical (2) is merely energy changed form; in coal in a and Coal, tangible personal Farrand property. Ill. 2d at 509. The briefs cover in detail great testimony scientific offered on whether energy electricity are tangible personal property, and the parties presented extensive on appellate arguments these points. however,

It is not necessary, for one to have read the briefs in Farrand Coal to understand that this court’s discussions of the tangibility of energy all, were not dicta. After Farrand Coal set forth the Coal, statute in See question. Farrand Ill. at 510. Moreover, it detailed the coal company’s argument the electric sold energy by the utility personal property. Coal, See Farrand 10 Ill. 2d at 508. It also set forth that the coal company’s theory of the case was that “energy, tangible personal property, bought coal, in the form of therefrom, extracted processed and resold as tangible personal property the form of electri cal energy.” Coal, Farrand 10 Ill. 2d Thus, at 509-10. is apparent from the face of the decision that a showing that the electric utility was selling tangible personal property to its customers was essential to the coal company’s claim and that the point was argued by the parties. Indeed, had the coal company not that argued the electric utility was selling tangible personal property to its customers, the Department would have been entitled to a judgment on that basis alone.

The Farrand Coal court ultimately addressed all parts of the parties’ claims. The court agreed with the that the coal company tangible sells personal (coal) property to the utility and that the coal is used or consumed by Coal, the utility. Farrand 10 Ill. 2d at 513. The court rejected plaintiff’s arguments that it is really selling energy the coal and that the is resold as energy 292 Coal, Ill. 2d at Farrand energy by utility.

electric the (1) energy intangible that explained 513. The court (and electric necessarily encompass would holding this (2) (Farrand can Coal, 511); energy 2d at 10 Ill. energy) (Farrand Coal, 10 Ill. 2d at not be from matter separated (3) selling tangible the electric is not 511); utility (Farrand personal property Coal, customers to its 512-13). 2d at casting basis for

Accordingly, possible there is no these issues as any discussion of aside this court’s or as asides. “by way” made the merely comments case, deliberately Rather, were essential to the they points Every court. counsel, upon by argued by passed in Farrand Coal was the court discussed point exception to whether directly relevant applicable. property purchaser resold personal be may the court’s part opinion no Consequently, dicta, if one of the discussed any points considered even the court’s decision. C.J.S. could have alone supported §229, (2006); Realty Woods v. Interstate at 227 Courts 1524, 1526, 537, Ed. 69 S. Ct. Co., U.S. 93 L. (1949).3 1235, 1237 its erroneous conclusion supports

The majority by selectively Farrand Coal was dicta from passage v. United States opinion, a Seventh Circuit quoting from (7th 1988). to the According F.2d 291 Cir. Crawley, 837 downplay significance of attempts to majority 3The referring to it as a by twice tangibility of discussion be 281-82. It should “three-paragraph passage.” 234 Ill. 2d at See longest in Farrand Coal. discussion this was the noted neglects Moreover, Coal, 10 Ill. 2d at 510-13. Farrand paragraphs, it is leav focusing three on these to mention that (Farrand (1) intangible holding energy is ing express out: (2) express holding that the sale 511); Coal, at the 10 Ill. 2d utility a sale at retail energy by a is not electrical 513). (Farrand Coal, 10 Ill. 2d at personal property

293 majority, tangibility the discussion of the “necessary” was not to the outcome of the case because sloughed damaging it could be off without the analytical opinion. structure of the 234 Ill. 2d at 281-82. There are First, several with this assertion. a fuller state problems ment of the principle thinking the of is that dicta is “an a on opinion expressed by judge point not case, in necessarily arising or a statement in an opinion not to responsive necessary issue and not any added.) the decision of the case.” 21 (Emphasis C.J.S. (2006). §227, Second, Courts at 224-25 far from support ing majority’s conclusion, why shows Crawley majority’s understanding of dicta is incorrect. In Craw the Seventh ley, Circuit considered whether a prior opinion changed had the standard in proof probation- revocation cases. The court had held consistently the court could revoke if probation reasonably satisfied had probationer violated a condition of his In probation. one opinion, United States v. Yancey, (7th 1987), F.2d 83 Cir. the court stated that the proof the case satisfied preponderance of the evidence cases, standard. In subsequent the court continued to ap ply the “reasonably satisfied standard.” Rather than simply stating statement was a Yancey mistake or that later controlled, decisions the court endeavored to demonstrate that statement Yancey’s dicta. The court listed several definitions of the word “ dicta, including that dicta is ‘a statement not addressed to the question the court or for its necessary deci before ” added.) sion.’ (Emphasis 837 F.2d at Crawley, quot ing American Family Shannon, Mutual Insurance Co. v. (1984). 560, 565, Wis. 356 N.W.2d “ court also stated that basic formula distin ‘[t]he [for from guishing holding is to take account of facts dictum] treated by judge as material and determine whether ” the contested opinion is based them.’ upon Crawley, America, 292, United Steelworkers quoting

837 F.2d at of Education the Fontana Local 8599 v. Board Unified of of Rptr. District, App. 162 Cal. Cal. School (1984). ap- that a different 16, 21 The court then stated are dicta, since the definitions identifying for proach inconsistent, is at stake in the definition. is to ask what following approach: the adopted The court then holding dictum is distinguishing from is at stake “What an part It is the of that a dictum is not authoritative. court, court, even if it is an inferior that a later opinion word ‘dictum’ reject. asking what the free to So instead against there are a court’s can ask what reasons means we previous opinion. found in a weight passage to a giving unnecessary was many. passage is that the There are One perhaps case and therefore outcome of the earlier to the been if it were es- as it would have fully not as considered closely reason is that the A related sential to the outcome. opinion of the earlier integral part an passage was not —it analytical damaging the sloughed off without can be part redundant and so it was a opinion, structure fully and, may have been considered. again, not opinion grounded passage the was not reason is that Still another may have judges the case and in the therefore facts another, it; basis adequate experiential lacked an an presented not passage in the was addressed the issue adversary issue, by the was not hence fires refined thinking that a reasons for All these are presentation. judicial fully measured not a passage was particular on likely to be relied it was not pronouncement, part of the may not have been readers, indeed that controversy on which the resolved the case decision that court).” (if (Empha- a federal jurisdiction depended court’s added.) 292-93. Crawley, 837 F.2d at ses state- Yancey’s ultimately concluded The court dicta standard the preponderance ment about been had not standard proper issue of the because satisfied and, the evidence case since raised in that no occa- standard, court had preponderance higher probation the defendant’s to consider whether sion should have been revoked based on the lower “reason- Thus, ably dealing satisfied” standard. the court was single with a sentence on an issue that had not been argued. briefed or in the suggests What above discussion that the Seventh Circuit would consider as dicta a discus- sion that was not only longest discussion an (1) opinion but also addressed an issue that was fully (even briefed parties extensively more than in the (2) case); present directly relevant to whether the statute (3) (4) applied; case; essential to the plaintiff’s only part of the discussion that grounded the court’s analysis in the court’s precedents? The discussion to which the majority refers was not redundant and remov- it ing absolutely damaged would have the analytical structure of the If we for opinion. ignore the moment the fact that off” “sloughing analysis this would still leave the holdings that is energy intangible and that electric utilities are not retailers of personal property intact, without this analysis, none of the prece- court’s dents would have been discussed. The court obviously considered important point to out the coal company’s arguments had no support in this court’s precedents and that all contrary authority out-of-state on the issue was distinguishable.

Moreover, the majority’s view of what it means for to be something for a court’s “necessary” decision would necessarily render vast amounts of supreme and appel late court case law mere According dicta. to the majority, the discussion of the tangibility of electrical energy was dicta because already the court had given another reason for holding statutory exception did not 234 apply. Ill. 2d at 282. But this would necessar ily mean that case in which a every gives court more than one reason for its holding, only first reason would judicial be a determination and all other reasons (see not the law only mere dicta. Not

would be 1526, at Woods, 537, Ed. at 69 S. Ct. 337 U.S. at 93 L. (“where or more grounds, a decision rests on two dictum,”)’, obiter category to the relegated none can be Co., 265 U.S. & Trust United States v. Title Insurance (1924) 1110, (same); Rich 472, 44 S. Ct. 621 68 L. Ed. States, v. United 275 U.S. Anchor Co. mond Screw (1928) (reason court’s Ed. 48 S. Ct. 72 L. because another merely conclusion is not obiter dictum considered)), it is ter fully argued reason was more that a will mean majority’s position policy. rible holding its will several reasons for wishing give court not be able to to do so or will either have no incentive Rather, the logical sequence. reasons in the most list the to be bind what reason it wants will have to choose court first. that discussion ing precedent put confusing the might be It appears the situation in which in Farrand Coal with analysis resolution substantively precludes resolution of one issue two gives examples Juris Secundum Corpus of the other. to be unneces- a court’s discussion of what it means for to the decision: sary does instance, that a statute once a court determines

“For case, concerning the statute’s any statement apply to a not constitutionality Similarly, court when a dictum. discus- any further jurisdiction, a case for lack dismisses §227, 225 Courts at is dictum.” 21 C.J.S. of the merits sion (2006). on the cannot rule A court perfect

This makes sense. it, nor can is not before of a statute that constitutionality it lacks a case over which on the merits of the court rule not may a court why is no reason But there jurisdiction. not to a apply does why reasons a statute several give rendering every done” rule case, there is no “one and and The bases majority dicta. first one obiter reason after the substantive legitimate holding any not on its dicta

297 Bris- in Justice the manner which reason, simply on but his opinion. tow chose to structure Coal. The court’s is no dicta in Farrand sum, In there concise, analysis, to-the-point case is a in that opinion for statutory exception why several reasons the giving does the property purchaser resold tangible personal opinion sentence in the court’s apply. Every not to a responsive point to that issue and is directly relevant parties. in contention the put Judicial Dicta or Obiter Dicta? B. the sake of argument

Even if we assume was tangibility court’s discussion of the above, only it could dicta, for all of the reasons set forth in v. Wil explained People be dicta. As this court judicial (2003): liams, Ill. 2d 206 204 normally obiter dicta and “Dicta comes two varieties: judicial judicial dicta. Obiter dicta are comments unnecessary case. opinion disposition that are to the of the (7th 1999). Dictionary Judicial dicta Black’s Law ed. unnecessary judicial opinion are comments in a that are to case, disposition but involve an issue briefed (7th Dictionary argued by parties. Black’s Law ed. 1999).”

Or, Cates, stated in the relevant in determin question ing judicial whether dicta is obiter dicta or dicta is to Cates, what extent the issue was before the court. The could not have tangibility at 81. been more central or relevant to the issue in Farrand Coal, and the issue in the trial court and litigated extensively briefed on appeal. does that this is- majority attempt argue not Instead, in Farrand Coal.

sue was not before court judicial seizes on the in Cates that statement argued by dicta is an of an on a expression opinion point court, parties deliberately passed upon by Cates, but not essential to the of the case. disposition 298

Ill. 2d at 80. The claims that the issue was not “deliberately passed upon,” and therefore the discussion judicial was not Coal, dicta. To reiterate: in Farrand energy intangible. court held Coal, that is Farrand 10 Ill. holding necessarily applies 2d at 511. This to electrical energy. arguing Coal, The defendants in Farrand when energy intangible, incorporated by that electrical is refer arguments energy general, noting ence their about (which energy intangible, energy that “if is electric is just energy) necessarily intangible.” a form of is Farrand explained Coal, defendants’ brief at 35-36.The court then any argument electricity tangible that that is finds no support in this court’s case law and all out-of-state opinions holding tangible distinguishable. it to be are up by Coal, Farrand 10 Ill. 2d at 512. The court summed holding energy by that the sale of electrical an electric utility tangible personal property. is not a sale at retail of according Coal, So, Farrand 10 Ill. 2d at 513. to the majority, holding energy intangible, any that all argument electricity tangible support finds no law, this court’s case that all out-of-state cases that hold electricity distinguishable, to be are and that energy the sale of electrical is not a sale at retail of tangible personal property “deliberately passing” is not upon question. Clearly, obiter dicta is now whatever any surprise this court wants it to be. Should it be thought no court to consider Farrand Coal that this court merely making comments as asides when it ad question? Waukegan Community dressed this See Unit Waukegan, City School District No. v. 95 Ill. 2d 60 (1983) (citing proposition 253 public for the Farrand Coal rendering utilities are in the business of a service selling tangible personal property); rather than in (Farrand App. 3d Coal classified Ill. at 921-23 intangible property); Energy, Hamer, Electric Inc. v. (2007) App. (citing Farrand Coal for proposition is the sale of that “the sale of service”); Department Revenue, 38 Coal Co. v. Union (1976) (“In App. the Farrand case the 293, 294 Ill. utility company does not sell held an electric court electricity tangible personal property when it sells major energy”). Ironically, appears that the electrical upon question ity passed that Farrand Coal believes majority it was reasonable for the too. The states that appellate Farrand Coal court to consider itself bound (234 282), abandoning that are now Ill. 2d at but that we understanding progressed has case because our scientific (234 284). Ill. 2d at These since that case was decided pass only did make sense if Farrand Coal statements upon question. legitimate

Because there is no debate as to whether tangibility this court’s discussion of the expression opinion upon point argued in “an a case deliberately passed upon by counsel and court” (Cates, 80), majority opinion represents 156 Ill. 2d at unequivocal repudiation a clear and of Cates and its progeny. Clearly, longer there is no a distinction in Il judicial linois between dicta and obiter dicta. Because the important distinction that one Cates drew is an valid applied by that has been years, this court and other courts for overruling precedent any I believe that of this why explicit should be appropriate and include a discussion of it is depart from is too stare decisis. Cates important and well established to be overruled sub silen tio. Farrand Coal About

C. What Was Not briefly point Next, I must out what was not the issue majority argues Exelon Farrand Coal. The notes that tangibility coal, that Farrand Coal concerned the not electricity. 234 Ill. 2d at 276-77. Because the obviously repudiate statement, it is does not this false argument majority’s if unclear influenced the er- tangibility roneous conclusion that the discussion of the was dicta. course the issue Farrand Of tangible. place, Coal was not whether In coal the first argue intangible? who would that coal is Such an asser- preposterous tion would be on its face and almost certainly supreme would never be the focus of a court opinion. position fact, In such a would be so absurd that anyone even who had never read Farrand Coal would pretty good have a idea that this could not have been the issue in that case. argued why anyone

Second, would have that coal is intangible? position Such a would have been fatal to both parties’ parties Both needed coal to cases. be arguments their to succeed. The wanted to plaintiff tax the on the basis that its sale of coal was a tangible personal property. company’s sale of In the coal paying argued tax, effort to avoid it that its sale of tangible personal property actually was a sale of the energy company argued in the coal. The coal that if we something tangible start out with whatever —coal—then up tangible. Thus, the makes energy the coal must also be tangible. plaintiffs Coal, in the coal is Farrand tangibility brief at 25. The of coal was assumed and necessary component by parties conceded both as a of respective positions, and the issue before the court their tangible. If this was indeed the was not whether coal interesting Coal, true issue in Farrand it is that it was opinion. Coal, in the See Farrand never discussed 2d at 510-13.

Regardless of discussion of whether Farrand Coal’s holding judicial tangibility was weight any departure dicta, and it is entitled to much requires decisis. I will therefrom a discussion stare depart why compelling reasons exist not to next discuss following precedents, which I will court’s from this

301 can- doing reasons for so majority’s demonstrate scrutiny. survive a moment’s not II. DECISIS STARE well stare decisis were underlying The principles in in his dissent impassioned Justice Freeman stated (2000): Mitchell, Ill. 2d 312 v. 189 People phrase the Latin stare decisis is derived from “The term ‘ moevre, “to quieta et non which translates stare decisis decided and not to disturb stand matters that have been ’ Wallace, Stare Decisis and tranquil.” J. what Activism, Passivism and Rehnquist Court: The Collision of (1994), 187, Casey, quoting 42 Buff. L. Rev. 189 Politics (K. Dictionary Phrases and Abbreviations 187 Foreign 1983). trans., engrafted principle Guinach 3d ed. This by Sir English jurisprudence, having recognized been Wil ‘ Blackstone, acknowledged “precedents liam who ’ followed, unjust.” flatly absurd or J. rules must be unless Stein, Hobgoblin Identifying ‘Foolish’Consis Doctrine: (1998) Law, 1017, tency in the 29 Tex. Tech. L. Rev. 1019 Blackstone, 1 *70. In American quoting W. Commentaries ‘ jurisprudence, “policy judgment stare decisis reflects a important ‘in more most matters it is rule of be settled than that it be settled applicable law ” ’ Khan, 3, 20, right.’ State Oil Co. v. 522 U.S. 139 L. Ed. 199, 212-13, 275, (1997), quoting Agostini 118 S. 284 Ct. 203, 235, 391, 422, Felton, v. Ed. 2d S. 521 U.S. 138 L. (1997), Burnet quoting Ct. v. Coronado Oil & Co., 393, 406, 815, 823, Gas 285 U.S. 76 L. Ed. 52 S. Ct. (1932) (Brandeis, J., joined by dissenting, Roberts and JJ.). Cardozo, Supreme As the United States has Court observed, judiciary prefers this doctrine because evenhanded, ‘promotes predictable, consistent judicial legal principles, fosters reliance on development decisions, perceived and contributes to the actual and Tennessee, judicial Payne 501 integrity process.’ v. 827, 720, 737, 2597, 808, 115 111 S. 2609 U.S. L. Ed. Ct. (1991). court, too, Long ago

This has voiced similar sentiments. 302 Burckhartt,

in Prall v. the court observed that the rule of stare decisis largely

‘is founded expediency on considerations of principles public policy, being and sound it indispensable justice, to the due administration of resort, especially by a court of last that a question deliberately once examined and decided should be argu considered as settled and closed to further ment, and the courts are slow to interfere with the may principle announced the decision and be upheld though they even would decide otherwise Burckhartt, question were the a new one.’ Prall v. (1921). 19, 41 light foregoing, recognized In has this court doctrine, inviolable, while not demands that it be over ‘only showing good Heimgaertner turned on the cause.’ Co., 152, Benjamin Manufacturing v. Electric 6 Ill. 2d 167 (1955).” Mitchell, (Freeman, J., 189 2d at 363-64 dis Ill. J.). joined Harrison, C.J., McMorrow, senting, Moreover, as both the United States Supreme Court explained, and this court have stare decisis considerations statutory are at their construction cases. In Neal apex States, 284, 295-96, 709, v. United 516 U.S. 133 L. Ed. 2d 719-20, 763, (1996), the Supreme 116 S. Ct. 769 Court stated the following: precedents part

“Our reluctance to overturn derives relationship of the from institutional concerns about the Judiciary Congress. give great reason that we One statutory stare decisis in the area of construction weight to ‘Congress change interpreta- is that is free to this Court’s Illinois, Illinois Brick Co. v. 431 U.S. legislation.’ tion of its (1977). 720, precedents have overruled our when We has ‘removed or intervening development law prior from the conceptual underpinnings weakened the decision, the later law has rendered the decision or where or competing legal policies.’ irreconcilable with doctrines (1989) Union, v. McLean Credit 491 U.S. Patterson (citations omitted). changes compelling those Absent intent, NLRB v. bearing Congress’ original evidence on (1985), system demands Longshoremen, 473 U.S. our

303 *** interpretations statutes. prior to our that we adhere statutory True, logic [the to may be little in there defend Court, so, has Congress, ***. Even not this construction] we to alter revising its statutes. Were responsibility case, Congress statutory interpretations case our from responsibility to cor- reason to exercise its would have less ” thought are to be unwise rect statutes that unfair. (1983), 324, 2d 336 In v. Celotex 98 Ill. Corp., Froud “ weigh of stare decisis [c]onsiderations court stated that *** construction statutory more in the area of heavily *** to an amendment such a amounts departure because in the change than simply of the statute itself rather to common law judiciary respect with thinking its control.” are under concepts properly which of when a example This case a textbook presents court stare decisis. As the should follow in its brief: explained personal property has

“The transfer or sale of seventy-five years. been a term of art Illinois tax law for legislature Occupa the Retailers’ passed When Illinois (ROTA) tion Tax Act it defined a retail sale as the tangible personal property ‘transfer of the ... ownership of consumption ... for use or ... for a valuable consideration.’ amended, (presently codified, §1 as at 35 p. Laws (2006)). substantively remains ILCS This definition 120/1 unchanged. legislature subsequently Id. defined When the sale of ‘retailing’ in the Investment Tax Credit as tangible personal property, operative phrase it used an retailing has been included in the for over definition (2006) decades, compare with 35 seven 35 ILCS ILCS 120/1 5/201(e)(3) (2006), legal which an established and has Zehnder, See, e.g., v. meaning in Illinois tax law. Schwak (1st 2001) 752, 756, N.E.2d 192 Dist. App. (holding that terms used in Investment Tax Credit had in Use Tax and Retail meaning same as same terms used Acts). Occupation ers Tax

* * * short, a well-trod In the tax treatment of dating In cases back decades area of Illinois law. a series of extending present, to the this court the Illinois Appellate although Court have established that property, ‘tangible it is not sold at retail as personal property,’ provided part but rather of a service. Conse- quently, provide electricity those who services are not subject sales, imposed to taxes on retailers and retail nor they exemptions are entitled to credits and reserved for appellate correctly retailers. The ‘that the presumed court legislature knowledge prevailing acted with of this case law’ when it used the of retailer well-established definition 9-10, in the Investment Tax Credit.” Defendants’ brief at 14.

In addition to the fact that the Illinois courts’ treatment decades, of this issue has been consistent the Depart points ment also out that we have clear evidence that the knows that the courts have declared that legislature is not included within the term electricity “tangible and that therefore must be personal property” electricity include specifically legislature mentioned if the intends to it. Farrand Coal was decided in 1957. In 1969, amended section 5 of the Public Utilities legislature (Pub. 26, approved August Revenue Act Act 76— (now (West 2006))). This section ILCS 620/5 of the Retailers’ Tax incorporates portions Occupation under Act into the Public Utilities Revenue Act. Because Gas & Coke Co. and Farrand Coal electric Peoples Light law, utilities were not retailers as a matter in such legislature explained incorpo “[r]eferences that Tax Act to Occupation rated Sections of the Retailers’ distributing mean the tangible personal property sales added.) when used in this Act.” (Emphasis (West 2006). contrast, In when the 35 ILCS 620/5 legislature question enacted the tax credit “tangible personal used the term legislature simply incorporating additional property” any language without 5/201(e) (West 2006). Conse electricity. See 35 ILCS did not presume legislature we must quently, to property” “tangible personal the term intend for tax it enacted the investment electricity when include credit. acknowledges “[t]he

Although is to effect statutory give rule of construction fundamental (234 274), 2d at it Ill. legislature” to the intention conclude, given possibly how it can explains never back to the 1930s that dating of tax law interpretations of a service and selling are in the engaged electric utilities property, given of tangible personal are not retailers is aware of these legislature we have that the the evidence them, in reliance on and has acted interpretations to include in the defini legislature intended in quest tion in the statute “tangible personal property” informs the in a majority helpfully legislature ion.4 The n.1) (see define may footnote 234 Ill. 2d at 284 now include or exclude electric “tangible personal property” to chooses, ity ignores legislature as it but the fact the has done this based on our definition. That already previous it is role of the out of why proper judiciary stay now Neal, 295-96, 133 L. Ed. 2d at the matter. See 516 U.S. at 719-20, exactly 116 S. Ct. at 769. The trial court had it when it stated in its order: “If Exelon wishes to seek right statute, changes up to the it should take the matter with the legislature.” sum,

In consistent given holdings the Illinois courts’ that utilities are not retailers of tangible personal electric property, given legislature the evidence that is it, in rebanee on aware of this case law and has acted we should adhere to our even if five members of precedent cases disagree this court now with it and wish that those has differently. legislature already had been decided The principal argument by Department 4This is the raised court, majority to before this and the has chosen not even it, acknowledge it. let alone address

its definition and it has free electricity been to include as it sees This is a example fit. clear of a situation in which it is more that the be important law settled than that it be settled At one in its right.5 point opinion, majority states that “in that construing legislation statutory lacks definitions, ignore this court cannot the laws of physics humanity has come to understand them.” 234 Ill. I at 282. have not seen this canon of previously statutory construction, but, valid, it assuming that is it not also that, true in construing statutory statutes lack definitions, ignore previous interpre this court cannot its tations those terms as the has statutory legislature come to understand them? And if these are both valid consider ations why paramount would latter not be of impor tance reviewing to a court?

Let us turn reasons for aban- majority’s now to doning Farrand Coal.

III. THE MAJORITY’S NOT-SO-NEW SCIENCE it Although majority acknowledge does not decisis, give is bound stare does reasons abandoning previous majority court’s decisions. precedents has chosen to overturn decades of this court’s Fajans. According on the basis of the affidavit filed Dr. reflects the “cur majority, Fajans’ Dr. affidavit electron rently theory electricity.” understood 2d at 283. The then cites three textbooks on explains they trace the “understand flowing from force to ing mysterious “right” question 5That this is a that can ever be settled debatable, holding day certainly are still to this as courts See, tangible personal property. e.g., XO New electricity is not York, Finance, Taxation & 856 N.Y.S.2d Inc. v. Commissioner of (2008); Power v. 51 A.D.3d 1154 Omaha Public District Revenue, 248 Neb. 537 N.W.2d Nebraska (1995).

307 consults majority The also 234 Ill. 2d at 284. electrons.” and Electronics textbook Electricity and a Teach Yourself “ is important ‘[i]t that proposition cites it for the in principles simple general physics some understand ” and electronics.’ electricity a full of grasp order to have Gibilisco, Teach Yourself 283-84, S. quoting 234 Ill. 2d at 2006). (4th majority Electronics 3 ed. Electricity & Coal was based on then its belief that Farrand explains century ago,” half a knowledge our “scientific of over from that decision depart and states that we should understanding electricity has because current “[o]ur 234 Ill. 2d at 284. The progressed beyond that time.” relied on portions Fajans’ of Dr. affidavit (1) electricity up is made are his statements (2) felt, electricity can be entity electrons; material — stored, tasted, seen, heard, measured, and and weighed, (3) nature; can be electricity to the laws of subject receive a shock person may touched or felt because a sum, In from 234 2d at 282-83. electricity. Ill. from our majority’s departing precedent reason this court’s scientific understanding in has since Farrand Coal was decided progressed understand that points that we now court did not understand in 1957 are reflected affidavit. A brief his highlighted portions Fajans’ Dr. tory lesson is in order. sense was discovered present-day

The electron in its 8 by the J.J. Thomson 1897. Collier’s English physicist (1997). However, even before Thom- Encyclopedia Michael had discovered discovery, Farrady son’s car- was not a continuous fluid but was Encyclopedia ried in discrete 8 Collier’s 787-88 pieces. (1997). about electrons important Other discoveries the next few decades: throughout continued (1913) attempt first to describe “The Bohr atom was the in an atom. Louis de the behavior of an electron Victor (1924) Broglie’s idea on the wave nature of the electron (verified experimentally by Joseph Clinton Davisson and 1927) Lester Halbert Germer in developed was into wave by Schrodinger Simultaneously, mechanics Erwin in 1926. spin of the electron was deduced Samuel A. Goudsmit (1925) George and E. Uhlenbeck from various features of spectra. atomic The equation correct wave for the electron (1928). given by equation was Paul A.M. Dirac The Dirac relativity correctly consistent with and special describes (aside spin magnetic electron’s moment from radiative corrections).” (1997). Encyclopedia 8 Collier’s The Dirac equation predicted positive existence of electrons, positrons, or were found positrons rays by cosmic Carl D. Anderson in 1932. 8 Collier’s (1997). Encyclopedia 788

Shortly discoveries, after these question to be in Illinois tangibility electricity began litigated magazine courtrooms and elsewhere. In Time on the trial court that would form reported proceedings Light the basis for this court’s decision in Gas & Peoples (1934): Ames, Coke Co. v. 359 Ill. 152 Chicago Judge “In his courtroom last week Circuit Harry M. Fisher stared at a voltmeter which had been placed before him on the bench. The voltmeter was con- switch, nected to a and the switch was connected with the lights. Judge courtroom the switch was closed Fisher When leap saw the voltmeter needle from 0 to 110 on the dial. thing he had to decide was whether the that made What leap tangible intangible. help the needle There to was him, arguing opposite dispute, but on sides of the were two distinguished Nobel Prizemen. subject

Point at issue was whether electric current was Twenty power companies tax. Occupation to Illinois 2% Edison, Peoples Light Gas & headed Commonwealth Coke, Service contended that and Central Illinois Public The State intangible, current was an hence nontaxable. com- current was a and taxable contended that taxes, State to modity. companies stood to lose in revenue, $5,000,000 annually. gain in some teaching physics attacked the orthodox No one having mass. A current is a flow of matter electric current 6,281 per billion billion electrons ampere of one is a flow of particle is a of mat- given point. a An electron past second a billionth of of a billionth of weighing ter 0.8999 billionths tangible? But was electric current gram. a (No- Holly Compton Arthur rose beetle-browed Dr. Up 1927). he, Electricity tangible, said Prize, was physics, bel heard, seen, felt, tasted. it could be because (Nobel wiry, Irving Langmuir Dr. rose tousle-haired Up 1932). he, Prize, chemistry, Electricity intangible, said seen, heard, felt, not be tasted. because could listened, Then, watched, Judge pondered. Fisher Circuit solemnly tangible, taxable com- pronounced he 1934). Court, modity.” Electricity in (July Time court, ultimately supreme the case reached the When to determine this court decided that it did not have public or not was because electricity whether Peoples a rendering utilities are in the business of service. Co., & Coke Light Gas at 158-61. The Retailers’ 359 Ill. Occupation only Tax Act was intended to to those apply in the of selling tangible personal who are business in for use or and utilities are property consumption, & Coke Peoples Light Gas rendering business service. Co., 359 Ill. at 158. People Menagas, v. (1937),

In 367 Ill. 330 this court current covered considered whether a theft of electric was from by larceny testimony statute. The court received an electrical who that is engineer explained electricity electrons, the motion of and that an electron is the small to reasonably accurately est unit of matter and known Menagas, that, 331. held science. 367 Ill. at This court energy intangible, electrical is it can be although Menagas, stored, measured, and carried off. 367 Ill. at relevant test ultimately 333. The court decided that of a something subject larceny for whether could be the away. it could and carried Because was whether be taken energy test, electrical fell within this it was covered larceny though intangible. statute, even it was Menagas, explained at 338.6 The court further holding way that this was in no inconsistent with cases Peoples Light Co., such as Gas & Coke which had held purposes engaged that, statutes, of tax utilities are in .7 selling. Menagas, service rather than 367 Ill. at 338 Supreme up 1942, In of Alabama took Court question electricity tangible personal of whether property. Curry Co., In v. Alabama Power 243 Ala. (1942), power So. 2d 521 the issue was whether the company required pay was taxes under the Alabama Resolving required Use Tax Act. this issue the court to electricity tangible personal property. consider whether Expert testimony question, typi- was received on this testimony McEachron, cal of the that Dr. K.B. explained electricity electrons, who that is a flow of that weight, may perceived it has mass or be may tasted, felt, the senses be touched. Ultimately, Curry, 243 Ala. at 8 So. 2d at 522-23. court determined that it did not have to decide the issue energy Menagas

6The court twice referred to electrical intangible simply “assuming” and never stated that it was it to be so, expert testimony the court contained and the record before explaining entity— is the flow of a material However, just assumption, if an electrons. even this was light express hold hardly problematic seems of Farrand Coal’s intangible. ing energy is categorization electricity intangible court’s of as for

7This just our purposes theft statutes would remain as consistent as of categorization electricity intangible purposes of tax of as court, 2007, discussing of the theft In in the reach statutes. expand statute, legislature intended to the defini stated that “the tangible personal property only of tion of to include not items estate, things electric property other of value such as real hut also added.) People (Emphases ity, services.” and telecommunications (2007). 312, Perry, v. 224 Ill. 2d as electricity tangible had defined the legislature because Tax of the Use meaning within the personal property Nevertheless, 60, 2d at 526. 243 Ala. at 8 So. Curry, Act. and question in on the weigh the court decided to The court electricity tangible.8 is determined to tangible, according of meaning determined that “ touched, also Webster’s, being perceptible is ‘capable ” 59, at 8 So. 2d touch, 243 Ala. palpable.’ Curry, fit this electricity at 526. The court determined that is made electricity up definition of because “tangible” Moreover, electrons, have mass or weight. and electrons smelled, fact, In a tasted, can be and touched. electricity body. sufficient could tear a hole in a charge person’s at 2d at 526. This decision was 243 Ala. So. Curry, in briefs in Farrand Coal. parties’ cited and discussed In this court decided Farrand Coal. As noted earlier, page page the briefs that case contain after argument tangibility electricity. scientific on the alia, can be plaintiff argued, inter touched, as when a receives an electric shock. person Moreover, it was to other senses it perceptible Further, energy tangible could be seen and tasted. measurable, real, because it objective, corporeal. Coal, also plaintiff’s Electricity Farrand brief at 22. can weighed, be measured and and it is carried to use of electrons. Farrand though customer wire Coal, plaintiff’s plaintiff brief at 23. The discussed Curry, noted that it held that Supreme

8The Court of Alabama’s discussion of this issue is today judicial what had been —until dicta: the —characterized parties necessary presented by resolution of an issue but not instance, however, disposition. majority for the In this does not Rather, recharacterize it as obiter dicta and brush it aside. court, express holding describes it as an which the join. chooses to at 284.

because it was made of electrons and up perceptible Coal, to the senses. Farrand plaintiffs brief at 29-30. In response, the defendants reviewed the scientific testimony plaintiffs that the witnesses were argued not because convincing they everything viewed almost as tangible and the defendants did not believe that legislature speak broadly meant so when it used the “tangible term in the Retailers’ personal property” Oc- Coal, Tax Act. Farrand cupation defendants’ brief at 16. The defendants that agreed “tangible” “capable means touched,” touch,” of being to the but did “perceptible not believe that the commonly meanings understood Coal, those terms included Farrand defendants’ energy. 11, Moreover, that, brief at 16. the defendants argued felt, although electricity could be that is not effects thing saying electricity the same that can be touched. Coal, Farrand defendants’ at The defendants brief 41. acknowledged they also that were not that arguing sense, was not in electricity tangible any possible may that be accurate to describe it as in the tangible However, sense that is everything tangible. exists legislature defendants did not believe that intended to use such a far-fetched meaning “tangible” Coal, in in question. the Act Farrand defendants’ brief at Moreover, 43-44. the defendants explained court’s that electric utilities were previous holding in engaged retailing a service business rather than were well-taken because the tangible personal property would be the only possible tangible things electrons, the customer. purchased by but those are not Rather, utility, through the electrons flow from the utility customer’s and then back to the appliances, Thus, a return wire. the customer is not through electrons, the work that purchasing purchasing but Coal, brief at 44. the electrons do. Farrand defendants’ its The defendants had based acknowledged Curry the basis of on decision misleading argued because electrons, that this was but by the to the customer are not delivered the electrons pays utility. for and receives Rather, the customer service). (a Coal, Farrand electric current benefit of plugs in his or at 45. a customer defendants’ brief When gets pot, The hot coffee. her electric coffee the customer possession of whatever customer does not come into Coal, defen- to become hot. Farrand caused the coffee explained that The defendants also dants’ brief at 49-50. holding a service Illinois cases that electric utilities sell utility really disposed because, if the of the whole case selling tangible personal property customers, to its not tangible personal property reselling then it cannot be any Coal, from coal or other source. Farrand derived defendants’ brief at 49. agreed parties that the definition This court with the “ being “tangible” ‘[c]apable touched; also, ”

perceptible palpable.’ touch; tactile; to the Farrand quoting Coal, Interna 10 Ill. 2d at Webster’s New (2d 1946). Dictionary however, court, tional ed. expressly declined to wade into the minutiae of the testimony right. Rather, scientific and declare who was “[t]he the court stated that true criterion on which the meaning of this case must turn is not what decision phrase, respective may witnesses attach to such but what Assembly meaning was the intention and of the General using phrase question.” in in Far in such the statute The court decreed that Coal, rand 10 Ill. 2d at 510. energy “fitting ordinary into the fell short ‘tangible’ popularly meaning of the word as understood Assembly.”9 Coal, Farrand used the General only speaking about 9Exelon claims that the court was opinion energy portion opinion, but the does in coal in this Coal, Moreover, in when not state this. the defendants Farrand Thus, at 511. the court seemed to accept the defendants’ that, argument be in although energy may sense that everything tangible, that exists is it did not believe that the legislature speak broadly. intended to so however, Just as importantly, grounded the court its deci sion in precedents. this court’s The court noted that had held in Gas & already Peoples Light Coke Co. that electric are in engaged utilities a service business and are not subject to the Retailers’ Tax. Occupation Farrand Coal, Moreover, 10 Ill. 2d at 512. although this court had held in Menagas energy that electrical was personal property it could be the subject larceny, the court in that referred energy case twice to electrical intangible. Coal, Farrand 10 Ill. 2d at Finally, 512. acknowledged court that other courts had held tangible personal property, distinguished to be but those they cases on the basis that either involved statutes declaring electricity holdings to be such or were based on are utility companies engaged electric manufac turing contrary commodities. This was to this court’s in ex rel. Mercer v. Electric holding People Wyanet Light Co., (1922), 306 Ill. 377 which held that electric utilities are neither nor mercantile manufacturing companies. Coal, Farrand 10 Ill. 2d at 512.

Several should be to the reader at things apparent First, highlighted Fajans’ in Dr. af- point. points new, and, fact, fidavit are not at all in Farrand predate Coal. are not from Farrand Coal because departing We understanding that case was based on our scientific of century ago understanding over half a and our scientific intangible, incorporated arguing energy is refer- that electric arguments energy general, noting in that “if ence their about (which just energy) energy intangible, energy is a form of electric Coal, necessarily intangible.” defendants’ brief at 35- Farrand 36. 234 Ill. 2d at 284. that time. progressed beyond

has consistent, Rather, overthrowing years we are that other reason than for no precedent established to the testify to expert went out and hired an Exelon to testifying have been experts same that things exact claims that our majority Although since the 1930s. since has understanding progressed scientific the same point of Alabama had reached Supreme Court for the same reasons in 1942. citation to

Second, majority’s the irrelevance of the “tracing texts with the electricity parenthetical three mysterious from force to understanding electricity should be This is not flowing apparent. electrons” now It is not the something happened that has since 1957. in benighted case that the Farrand Coal court was a state believing electricity of scientific that understanding, force, a but the court understands mysterious present Rather, electricity is a flow of electrons. the Farrand Coal court understood is a perfectly well Moreover, flow of electrons. as Time magazine reported in proceedings the trial court led to this Co., court’s decision in & Coke Peoples Light Gas teaching physics “[n]o one attacked the orthodox having electric current is a flow of matter mass. A current 6,281 ampere per of one is a flowof billion billion electrons past given point. particle second a An electron is a of mat- weighing ter 0.8999billionths of a billionth of a billionth of 1934). Court, (July 30, gram.” Electricity Time irrelevant is the citation to Teach Similarly majority’s Electricity Yourself and Electronics for the proposition general physics principles that one must understand electronics, never as the grasp identifies that the Farrand Coal any principles physics Indeed, it in- grasp. majority’s court was unable to is the not based on ability grasp any to that Farrand Coal was it to see that its theory electricity that makes unable Third, entire opinion rests on an invalid premise. reader Fajans’ will note that Dr. about points being to the senses and a perceptible person can receive a shock from equally are as stale and long predate Farrand Coal. only thing

The in Dr. affidavit that the Fajans’ major- ity points to that Farrand Coal would be his postdates assertion that recently scientists have been able to see density scanning tunneling of electrons with micro- scopes.10 scanning tunneling The was devel- microscope in 1981. See oped http://en.wikipedia.org/wiki/ (last visited December Scanning_tunneling_microscope 2008). surely But does not believe that any First, this is reason to overturn Farrand Coal. this was not an advancement in electrical The scan- theory. ning tunneling microscope merely allowed scientists to get they already better look at what knew was there. Second, this previous holding court’s decisions retailing electric utilities render service instead of are not based on disbelief personal property any scanning in the electron or the of electrons. The density if might be relevant this court had tunneling microscope stated that until someone could that electrons have prove density, classify electricity intangible, we would but implied any thing. Finally, this court never said or such scanning tunneling let us examine where the majority’s intent. legislative takes us terms of microscope point member be any today’s majority willing step Would following argument? forward and make the When enacted the tax credit in legislature question utilities was aware that this court had held that electric not retailers tangible personal property. are however, be avail- wanted this tax credit to legislature, brief, portion rely on of Dr. 10In its Exelon does not Fajans’ affidavit. simply considered legislature

able to electric utilities. electric- including property defining tangible personal Public Utilities in section 5 of the as it had done ity, that, just out pointed But then someone Revenue Act. microscope year, scanning tunneling the previous would use Realizing invented. that scientists had been electrons, the legislature density this to see would change that the Illinois Court Supreme concluded and therefore electricity, mind about the tangibility its the undefined term simply could use legislature wait for this court to property” and “tangible personal majority willing Unless the overrule Farrand Coal. I it will have to make this think extravagant argument, scanning tunneling the invention of the concede into any insight in 1981 does not offer microscope this tax credit to be legislature whether intended electric utilities. available to

Fourth, when the states that Farrand Coal majority understanding was based on our scientific of over half a contemplate fails to the extent century ago, weigh to which Farrand Coal declined to in on the battle Thus, one experts of scientific in that case. as soon as to the begins searching legal questions the answers Electricity raised in this in Teach Yourself appeal Shocking Electronics or Electric Universe: The True missed Story Electricity, person entirely has extensive, point experts gave of Farrand Coal. The Coal, in arguments detailed Farrand and the parties on these at in their briefs. expounded points great length But, out, this Department pointed expressly as the court if any particular expert right declined to declare simply said that true criterion on which the deci- “[t]he sion of this case must turn is not what meaning respective may witnesses attach to such but what phrase, meaning Assembly was the intention and of the General in in Far- using phrase question.” such the statute thing Coal, rand Ill. at 510. One that should be abundantly anyone clear to who has read both the briefs Fajans’ that, and the decision in Farrand Coal is had Dr. part case, affidavit been of the record it would slightest not have made the bit of difference to this Coal, court’s decision. In Farrand this court did not legislature speak broadly believethat the intended to so as to include within the definition of personal property. explained But now that Farrand Coal tangible personal property, is not we know legislature sure that the does not intend to include for “tangible personal when it uses the term property.” argument, justices

At oral one of the the asked Department’s attorney question if the before this court is simple question a scientific one. The answer to that is If “no.” Farrand Coal would have settled the battle of experts and based its conclusion on had the who science correct, if of the issue and there was no evidencethat the

legislature conclusion, had relied on that and if the sci- changed perhaps time, ence had in fact since that then question the before this court would be a scientific one. Perhaps things But none of those are true. because the body equipped Farrand Coal court realized that this is ill disputes among physicists, simply to resolve it relied on legislature intended when it used what it believed the “tangible personal property.” question the term The legal one, before this court is not a scientific but a one equipped that this court is well presume to answer: Should we legislature enacted the tax credit that when the knowledge long- question in standing it acted with of this court’s electric utilities are not determinations that tangible personal property? ques- That is the retailers of majority court, and the never answers it. tion before majority Instead, makes a scientific determina- only argument. having tion after heard one side a matter Fajans Dr. stated fact, but our cases show of irrefutable scientific this fact prize dispute scientists —even Nobel winners — case, In this litigated. time the every question its if the get expert asked for time to own Department one, determined to be a factual but question were has question on its claim that Department prevailed law, and the been decided this court as a matter its hardly grounding posi can be faulted If scientists precedents. distinguished tion in this court’s justices cannot on this should the of this agree question, can solve the leery believing they court not be by reading Electricity Teach Yourself question Moreover, if now wants to make Electronics? issue, when it oversimplifies question this a factual are determines that all we need to know is that electrons even in 1934. Also matter —a fact that was not contested the util relevant is whether electrons are what is sold words, to the customer. In are electric utilities ity other retailers of electrons or of the work that electrons do? argument was made in Farrand Coal that because from the to the customer and utility electrons flow utility, purchases then back to the the customer never Rather, utility. simply electrons from the the customer is the work that electrons purchasing something do— intangible. sup This conclusion is unquestionably the witness in ported by testimony expert the electrons are Menagas, explained “[w]hen who out the conductor are with going through they charged resistance, but when forced the potential energy, through motor, potential such as an electric bulb or a the light out, return to the energy is taken and the electrons generator possessing only energy.” Menagas, kinetic If in Dr. affidavit anything Fajans’ Ill. at 332. there is question sug- that would call these conclusions into gest actually purchases that the customer electrons from utility, majority the has not cited it. majority comprehend

Fifth, the also fails to the extent grounded to which Farrand Coal in was this court’s precedents, Light particularly Peoples Co., Gas & Coke which held that electric utilities are in the business of rendering tangible a service and are not retailers personal property. only majority significance sees Peoples Light in Gas & CokeCo. is that the court deemed unnecessary it tangible personal property. to determine whether was 2d at 280. But the ques unnecessary reason the court found it to decidethat tion was that the court concluded that electric utilities any property, were not retailers of or otherwise. they engaged Rather, in service See were a business. Peoples Light Co., Gas & Coke 359 Ill. 2d at 154-61.The pronouncements upshot Il is that we now have from the Supreme purposes that, Illinois tax linois Court using virtually definitions, utili statutes identical electric (Exelon) (Peoples Light & ties both are and are not Gas Co.) tangible personal property.11 retailers of Coke Fajans’ point, majority affidavit 11On a side refers to Dr. being report “unrebutted.” 234 Ill. 2d at 282. It is not clear whether, using term, giving credence to judgment to in its favor because Exelon’s claim that it is entitled pointed be out that this affidavit was unrebutted. It should argued retailing Department that whether Exelon was involved in statute, Department question a of law under the and the requested expert in time to obtain its own witness the event question agreed determined to be a of fact. The AU with this was law, that, engaged Department as a matter of Exelon was not apparent anyone retailing. would have been who understood It Peoples Light and Far Gas & Coke Co. this court’s decisions expert getting af point in another rand Coal that there was no Department electricity. tangibility Since the fidavit on the law, question prevailed point and since on its that this was anticipated indiffer- possibly have either the could not that the discus statement Finally, majority’s as to “skewed electricity was tangibility sion of the (234 284), Ill. 2d at in that case” presented true issue in Farrand Coal. There one “true issue” there was no claim plaintiff’s several distinct issues because were The court things. several different required prove it to issues, all of the and its discussion discussed by anything. not “skewed” electricity was tangibility above, it thoroughly demonstrated Quite contrary, as This corut precedents. in this court’s solidly grounded in the busi had held that electric utilities were already service, retailing tangible personal not rendering ness of court court have appellate and this and property, fact, only In followed that consistently precedent. is the past years “skewed” decision on this issue in the one, in which a of this court allowed its present majority merely to an affidavit judgment be skewed the 1930s. points rehashed that have been made since holding as a benefit of its majority trumpets California, line brought Illinois will now be into with Island, Alabama, Florida, Rhode which have all held to be in different tangible personal property contexts. 234 Ill. 2d at 284. But never explains possible the relevance of this or what benefit will ensue. This is no or consequential more relevant than the fact we have now created a conflict with York, held electricity Nebraska New which have not York, XO Inc. tangible personal property. be See New precedent ence this court would show to its own or that this court new, 100-year-old would treat science as there is little relevance in Moreover, Fajans’ being to Exelon’s Dr. affidavit unrebutted. point requires that the unrebutted affidavit this court to find that tangible, necessarily if in the that would mean that party presents next tax case a an unrebutted affidavit that electric- ity intangible, change mind this court would be forced to its again. Finance,

v. Commissioner Taxation & 856 N.Y.S.2d (2008); 310, 51 A.D.3d1154 Omaha Public Power District Department Revenue, v. Nebraska 248 Neb. 537 (1995). important question N.W.2d312 The is not what legislature held, other states have but what our intended phrase “tangible personal property” when it used the in particular previous tax statute. Given this court’s question. decisions, there can be no IV CONCLUSION agree my colleagues appellate I with that the court’s affirmed, decision should be I do so for the but would appellate reason that the court’s decision was correct as consistently a matter of law. This court has held that rendering engaged service, electric utilities are in not in retailing tangible personal property. legislature The has purposes that, understood for decades for of Illinois tax “tangible personal property” law, the term does not electricity, accordingly. include and has acted It is now proper judiciary stay majority the the The role of out. surprising has demonstrated a indifference to this court’s precedent, violating by casting established first Cates aside this of an to a court’s discussion issue central plaintiff’s fully parties and briefed the as obiter claim overturning years consistent, dicta, and then precedent the basis of ancient science that established on majority predates precedent. One senses opinion that the Illinois a sincere desire to demonstrate Supreme cutting edge of the latest sci- Court is on changed Unfortunately, the relevant sciencehas not ence. years, past no evidence that the in the and there is legislature’s intent has either. Rehearing Upon

Dissent Denial of dissenting: THOMAS, JUSTICE majority’s Although decision to make I commend the short of remedy falls far only, opinion prospective its rehearing allowing in this case: truly necessary what is The arguments. addressing Department’s overlooked or are allowing rehearing points grounds (see 367), and this opinion 210 Ill. 2d R. misapprehended contains both. argu majority barely Department’s mentions

ments, Department’s has overlooked the essentially that, completely only entire brief. Not position. See 234 Ill. misrepresents Department’s (“The ‘tangible that if parties agree at 284 then Exelon would be personal property,’ engaged 201(e)”). The principal as defined section ‘retailing’ argument appeal made on —that years this court’s back 75 given precedents going electric are not retailers of tangible personal utilities (see Co., & Coke 359 Ill. at property Peoples Light Gas 158-61), the did not legislature we must assume that intend for credit in to to electric question apply the tax utilities —is never addressed. This failure of the majority to do so is rendered even more the reasons puzzling the majority gives making opinion prospective its only. The majority today’s concedes that the outcome not opinion clearly was foreshadowed. 234 Ill. at 286. Indeed, opposite clearly it was the result that was foreshadowed. The majority further states that Farrand Coal “suggested” “obiter dicta” that is 234 Ill. 2d at 286. The also intangible.12 explains that a prospective application give legislature will definition, comport chance to with this court’s new while in other areas of avoiding uncertainty tax law would result from 234 Ill. 2d at application. retroactive acknowledgment legisla- 286. Is this not a clear that the Second, First, wrong suggestion. 12This is twice. it was not a dicta, was not let alone obiter dicta. intend

ture did not for the tax credit to include electric And, utilities when it enacted it? if the originally major concedes that ity statutory “[t]he fundamental rule give construction is to effect to the intention of the (234 274), legislature” Ill. 2d at not hold that why simply the tax credit is not available to electric utilities? I would rehearing, Department’s arguments, allow address the this court’s well-established and hold apply precedent, tax credit is not available electric utilities. summary key problems major Below a with the ity opinion that demand some sort of corrective action.

I. Obiter Dicta: The Is on the Majority Opinion Wrong

Merits correctly out that this court’s Department points determination that Farrand Coal’s discussion of the was obiter dicta is tangibility demonstrably notes, false. As the an essential element of demonstrating claim in Farrand Coal plaintiffs product purchaser tangible its was resold could not personal property. Accordingly, plaintiff utilities sell demonstrating succeed without that electric Thus, of this tangible personal the discussion property. Moreover, not be in the section of issue could obiter dicta. that the is the court’s opinion majority acknowledges this court stated holding, quite clearly explicitly sale of energy by utility the sale of electrical is not a Coal, 10 Ill. 2d at personal Farrand property. said 513. How much more could the court have clearly Moreover, energy it? if the court held that expressly (Farrand Coal, 511), Ill. 2d how can the intangible at of first conclude that it is an issue majority possibly Ex intangible? is energy whether electrical impression argument sup in its written elon’s counsel conceded that holding energy that port summary judgment necessarily electricity: includes intangible Co. found that court in Farrand Coal “The ordinary sense of the word ‘tangible’ in the was not matter, because, with mass and apart from its connection stored, transported, weighed, ‘energy’ cannot be touched, by perceptible it thus not otherwise and added.) (Emphasis senses.” really expect anyone majority that to believe Does intangible energy court stated that when this tangible personal retailers of electric utilities are not (for making merely property comments offhand reason) addressing reject instead of who knows what ing key component plaintiff’s Moreover, claim? major opinion. majority The does not believe its own the ity was based on our scientific states that Farrand Coal century understanding ago, of over a half but that our progressed understanding of has current impression beyond time.13If this is an issue of first (234 286), understanding of Ill. 2d at what has our beyond? electricity progressed couple points of additional

The makes a Department points First, out that should be noted. already precedent from this court has that the relevant Waukegan holding. District, as a In School been described Peoples explained “[t]his this court court held (1934), Light Gas & Coke Co. v. Ames public occupation apply utili the retailers’ tax did not corporations in the business ties because those are not selling tangible personal property, but are in the business (See providing public utility a service. also Farrand ***.)” (1957), (Emphases Halpin Coal 10 Ill. 2d 507 v. added.) Waukegan District, 95 Ill. 2d at 252-53.14 School years decided five

13It should be noted that Farrand Coal was hydrogen bomb. after the United States had detonated properties gives support claim that the no at all for its mystery in electricity were a 1957. Department notes, validity of Wauke-

14Asthe the continued Second, court read Farrand Coal the appellate same Co., In way. appellate Union Coal court stated that “[i]n the Farrand case the court held an electric utility company tangible does not sell when it personal property added.) sells electricity energy.” or electrical (Emphasis Co., Third, Union Coal App. 3d at 294. the Depart ment out that of points meaning Farrand Coal was so well established that even Exelon’s counsel several at times the administrative and circuit court levels described Farrand Coal as is not holding The tangible personal property. replete record is with such It was after Exelon’s examples. only repeated at tempts to Farrand Coal failed that Exelon distinguish changed position its on and made a dicta appeal argu argument ment —an that should have been summarily rejected. court

When this can characterize as obiter dicta uniformly recognized discussion that has been as a hold- ing key and that addresses a of one of the component case, gan School District is now In that also doubt. this court applied “persons engaged held that a tax that to in the business of distributing supplying, furnishing, selling electricity for use or consumption” impermissible was an tax on sale services. District, taxing Waukegan author School 95 Ill. 2d at 252-54. argue taxing “product” ity tried to that it was sold the util court, Peoples Light ity, relying on Farrand Coal and Gas but Co., rejected argument on basis that utilities & Coke personal tangible property. render a service and are not retailers explained This court that the term “service” under Illinois tax law personal “all transactions other than sales means ‘sales’ added.) District, property." (Emphasis Waukegan School 95 Ill. 2d Therefore, at 254. Commonwealth Edison’s sale of to its part provided as of a service and was not a sale of customers was District, tangible personal property. Waukegan Ill. 2d at School tangible personal 253-54. If electric utilities are now retailers (234 284-85), Waukegan property Ill. 2d at then School District validity Peoples Light Gas & Coke Co. now of the same dubious and Farrand Coal.

parties’ court will characterize claims, shows that this avoiding anything decisis con- dicta, thus stare as obiter expect and bar the bench This court cannot siderations. respect opinions of deference and to afford our a level unwilling give ourselves. that we are importantly, for a however, let us assume Much more relevant is correct and that all moment that the portions This in mere obiter dicta. of Farrand Coal were majority’s way justifies refusal to consider the no using phrase “tangible personal legislature’s intent in fallacy property” question. An unstated in the statute in apply majority opinion of dicta to in the is that the rules they legislature. willing do If are to concede that we not, then it that we must consider whether is obvious legislature on Farrand Coal and would have relied already interpreting I have demon the decisions it. As majority’s opinion case, above, strated until the in this appeared agreement there to be universal about what that, Farrand Coal said. Given it is safe to assume that legislature Further, acted with the same belief. there appellate authority describing portion court this holding. Co., Farrand Coal as a See Union Coal App. 3d at 294.

Taking things step further, if what the Farrand opinion majority’s opinion Coal did not even exist? The directly contrary Peoples Light would still be & Gas CokeCo. This court in that case that utilities established tangible personal property, are not retailers of but are engaged Peoples Light in a service business. Gas & Coke gas Co., 359 Ill. at 154-58. That case involved whether and electric Occupation under utilities could be taxed the Retailers’ upon Act,

Tax which was a tax retailers of tangible personal property. parties case, in this As concerning introduced scientific evidence they whether what tangible. sold was This court concluded that it did legislature issue, not have to reach that because the differently treats utilities and retailers and that a tax imposed imposed on retailers could not be on utilities. purposes, that, The court held for tax utilities are engaged in a service business and are not retailers. Com case, too, monwealth Edison was involved in that and it adopt and the other utilities convinced this court to position. agreed We with Commonwealth Edison and the occupation other utilities that “their constitutes a peculiar enterprise entirely class business distinct and separate the business the retailer or retail mer from added.) (Emphasis Peoples Light chant.” Gas & Coke language Co., 359 Ill. at 155. This court held that the public clearly legislature the regards utilities act showed that the Light engaged Peoples

utilities as in service. Gas explained Co., & Coke 359 Ill. at 155.Wefurther legislature could not have intended the Retailers’ Oc cupation apply Tax Act to to utilities because “the act plainly engaged selling refers to those in the business of tangible personal property consumption.” for use Peoples Light point Co., & Coke 359 Ill. at 158. This Gas repeating: specifically that the bears this court held legislature apply could not have intended a statute to to public engaged in the busi utilities to ‘‘those if referred selling tangible personal property.” case, In ness this legislature the we are faced with a tax credit that selling engaged reserved for those in the business of tangible personal property. Even if Farrand Coal had arguments rejected, existed, Exelon’s should be never very they rejected because of the law that should be helped bring predecessor Exelon’s to about. say if that all relevant

Even this court now wants parts dicta, obiter that does not of Farrand Coal were to consider whether the mean that we do not have opinion, legislature would have acted in reliance on that interpreting any any opinions it, or on of the or on of the re majority does the Similarly, that it. preceded opinions have concerned that the would ally legislature believe Menagas’s whether statement itself with as and that merely “assumption” was an intangible 281)? (234 Ill. 2d at holdings do not constitute sumptions points. around to these coming The seems to be majority “it was in the already acknowledged opinion It to consider itself bound for the court appellate reasonable tangibility court’s discussion of the by this Moreover, in the Coal.” 234 Ill. 2d at 282. Farrand making prospec this decision opinion new section not holding tive the court its only, explains legislature and that it wants to clearly give foreseen 2d at 285. comply holding. a chance to with its Thus, majority clearly acknowledged strong has (if certainty) legislature not that the relied on possibility appellate previous opinions. this court’s and the court’s refusal to ad justification majority’s No exists dress the Department’s arguments. Legal Question Question:

II. A Becomes a Factual Remedy Wrong Is

Majority’s (or reason that at least a more rehearing Another is neces majority opinion) extensive modification to the is to to ward off the sary clarify holding court’s begins confusion that follow. The majority inevitable will solely its that “this case analysis by stating presents If the had questions majority of law.” 234 Ill. at 273. question addressed the true in this case —whether we enacted the tax credit presume legislature when long it acted with of this court’s question knowledge utilities are not standing determinations that electric tangible personal property ques retailers of —then never ad legal tion would be a one. But issue, instead to answer a choosing dresses that factual whether, fact, as a of scientific electric- question: matter ity tangible.15 is The court then relies on the fact that the record contains the unrebutted affidavit of Dr. Fajans is at electricity tangible. Clearly, Ill. 2d 282. resolving question, legal is a factual not a one.

The in Department argues petition rehearing its for if this court now wants to make this a factual ques- one, tion instead of a then it should legal remand for proceedings. Department’s further The basis for the sum- mary judgment motion was that whether an electric util- ity is a “retailer” under the statute is a of question law and that were not physical properties electricity material to that The Department explained issue. Fajans electricity whether Dr. believed that was tangible irrelevant, a matter of science was because the issue had been decided as a matter of law. Exelon already greatest misunderstanding majority opinion, in

15The everything, question which taints is its belief that the before the simply court is scientific. This a nonissue introduced into the unfortunately centerpiece case Exelon that this court made the opinion. Department put reply of its best its Exelon’s judgment response summary motion when it wrote: to its Fajans, Taxpayer’s expert, “The fact that Professor believes science, however, electricity tangible as matter legal consequence. is of no The issue of whether credit, question of this tax is not a purposes fact, Assembly of science or even but what the General phrase ‘tangible personal intended to include under the From the Farrand decision we know that within property.’ ordinary meaning, and popular the framework of its electricity. include Ac- ‘tangible personal property’ does not light, any or be as- cordingly, a scientist can shed no sistance, understanding Tribunal whether the to this ‘tangible within legislature meant to include ’ only can be addressed personal property. question This statutory through law means of question a court as a has Supreme which the Illinois Court interpretation, added.) already (Emphasis done.” es- was an electricity that whether argued resolved, and at that needed to be question sential factual mo- judgment that its summary one even conceded point electricity denied because whether tion should be was a material property are tangible personal electrons fact in As I noted judgment. question precluded summary concurrence, its Department grounded the my special in this court’s precedents motion summary judgment law, but asked for the as a matter resolving question the relevant its own in the event that expert time to obtain The Department determined to be factual. questions were this was a of law argument question on its prevailed level, level, court and the at the administrative the circuit Thus, there was never a reason appellate court level. If testimony the to submit on this issue. this Department be court with Exelon that the issue that must agrees fact, agree resolved is one of scientific then it should also that Exelon took below: the position with the fact sum- question precludes existence of this material in Exelon’s favor. mary judgment completely misrepresented Depart This court ment’s in its when stated position original opinion ‘tangible personal that if parties agree “[t]he in property,’ engaged ‘retailing’ then Exelon would be 201(e).” defined section 234 Ill. 2d at 284. This was never the and this alone Department’s argument, point The grant rehearing.16 Department’s mandates that we major Department argument, 16Even if the had made this reject Peoples ity required Light would be it under Gas & Coke held to be irrelevant Co. If the scientific evidence that case was retailer, question utility then it to the of whether an electric is a are not bound should also be found to be irrelevant this case. We (Of course, Depart by party’s framing a issue. incorrect issue, incorrectly For a ment did not frame the did. Department actually argued, quoted directly summary of what the brief, Department’s my special concurrence to the from the see position utility an is a “re- was that whether electric question tailer” under the statute is a of law and that physical properties were not material to correctly argues that issue. The that now changed legal question that this court has into a factual Depart- one, the cause should be remanded so that the may ment contest the material facts. All relevant facts opinions Instead, and scientific should be considered. majority simply fact-finding process shuts down the after hearing only part argument. side of This one one profoundly Department. unfair to the Department correctly argues that, if is a important question, factual then several issues need to my relying special First, concurrence, be resolved. on argues that, material, even if electrons are utility tangible that does not make an electric personal property. a retailer of testimony explained expert before, IAs previous that electrons considered our cases shows utility then back to flow from the to the customer and utility, possession of so that the customer never takes simply purchasing electrons. The customer is the work unquestioned intangible. I stated that electrons do—an Fajans’ previously anything “[i]f af that, there is in Dr. question fidavit would call these conclusions into actually suggest purchases customer utility, majority has not cited it.” electrons from the (Thomas, concurring). specially J., 234 Ill. 2d at 319-20 point, only Fajans’ report not contradict this does Dr. Not Fajans’ report, explains fully supports he it. In Dr. along power source to the load electrons flow from the power wire, from the load to the one and then back showing report diagram includes a source. The even power flowing source to the load and from the electrons (234 (Thomas, J., specially majority opinion Ill. 2d at 303-04 concurring)).)

333 words, In other power to the source. then back corners overstated, even within the be point cannot four exists whether legitimate question Fajans’ report, Dr. of tangible be considered a retailer an electric can utility of personal property.

Indeed, Equalization the State Board of California (the Board) to Fajans’ report relied on this of Dr. aspect sale of a electricity was the conclude that the sale of tangible personal property. service rather than a sale 31153476 PacifiCorp, In re WL Appeal In 12, 2002), Board considered whether (September electricity tangible personal was the sale of sale relied on Dr. The in that case respondent property. electricity Fajans’ argue report Fajans’ concluded that Dr. personal The Board property. instead led to the conclusion that the sale of report is the sale of a service. The Board noted that electricity Power & Supreme Dayton the Ohio Court held Otte v. 33, 36, Light Co., 37 Ohio St. 3d N.E.2d (1988), that is a service rather than a product: industry

“A human ‘product’ anything made Electricity appears art. to fall outside this definition. This electrically charged is so because is the flow of particles along a conductor. DP&L does not manufacture rather, electrically charged particles, but sets in motion the necessary electricity.” elements that the flow of allow to be consistent with Fajans’ report Board found Dr. Otte: Fajans’s electricity in

“Although Professor discussion of respondent’s position report support his seems intended to electricity ‘tangible personal property’ emphasiz- electrons, ing ‘physical the and material’ nature of his discussion is also the definition of electric- consistent with ity electrically charged along in particles Otte as ‘flow of addition, Fajans’s In a conductor.’ Professor discussion of electricity of the court is also consistent with the conclusion system’ respect in Otte that the ‘distribution with view, electricity just In there was a service. our as the system’ by electrically of ‘distribution which flow service, charged particles occurred in Otte was a appel- generation electricity lant’s and transmission of were also services under section 25136.” up by concluding purposes that, The Board summed “for electricity intangible.”17 law, of California tax Fajans’ report justifica- Thus, Dr. affidavit and are no fact-finding shutting process. Important tion for down the questions concluding resolved, need to be and that an simply beginning, end, electron is material is not the inquiry. PacifiCorp shows, As In re one Appeal of possible Fajans’ conclusion that can be taken from Dr. report majority’s hope- view that this court is not lessly out of touch with science in 1957 when it decided rather that this court was ahead of but Coal, Farrand game in Peoples in 1935 when it held Light Gas & sale of is the sale of a service Coke Co. that the tangible personal property. than sale of rather argues questions Other factual that the changed need to be resolved now that this court has (1) inquiry whether, to one of fact are: when the Invest (234 “humanity” ment Tax Credit was enacted 282) (and, by necessary extension, the General Ill. 2d at tangible personal Assembly) electricity to be considered (2) property; whether, if even the transmission tangible personal property, is the sale *** retailing” “primarily engaged within Exelon was designated unpublished “not to be 17This is an decision that is only precedent.” I discuss it here to show that more than cited as Fajans’ report. legitimate be drawn from Dr. one conclusion can Further, Valley majority, cited Searles in the California case Equalization, Operations, Inc. v. State Board 160 Cal. Minerals (2008), appellate App. Rptr. 3d 857 the California 4th 72 Cal. PacifiCorp Appeal re court itself cited and discussed In dismissing nonprecedential. distinguished it as it instead of Credit, was instead Tax of the Investment meaning the transmis- production, purchase, in the engaged primarily Both are well- electricity.18 points sion, and distribution Clearly need to be resolved. taken, these questions and remand is the appropri- is correct that a the Department decision to majority’s the following ate course of action into one of fact. inquiry transform the relevant of the Completely Dispose Appeal III. Failure to purely made its opinion the court has Now 2009 and after— only year to tax prospective applying — court, its appellate affirmed the judgment and has uniformity Exelon’s addressing reasons for not previous sought no valid. Exelon argument longer clause are theories: years tax credit for tax 1995 and 1996 under two (1) construc statutory to it as a matter of is entitled (2) failure to it the tax tion; Department’s grant credit clause of the Illinois uniformity violated reaching it is not Explaining why Constitution. that, issue, Department second the court states “[a]s summary judgment in its motion for correctly observed court, if Exelon argument quali and at oral before this 201(e) as a matter of statu fies for the section tax credit construction, tory then there is no reason to reach the alternative constitutional issue.” 234 Ill. at 274. court later that constitutional issues are explains only may reached when the matter be resolved on nonconsti grounds, “disposition tutional and states that the court’s of this cause obviates the need to determine whether the majority’s implied question

18The does conclusion that curious, given majority’s citation to not need to be answered is Hyman, Hyman Hyman, L. A. & R. America’s Electric Utilities: (7th Past, 2000), proposition Present and Future 89 ed. for the “perform following that electric utilities must functions to transmission, product: production, marketing, deliver the distribu tion, metering billing, supply.” and retail 234 Ill. 2d at 281. uniformity violated the clause of the Illinois

Constitution.” 234 2d at goes saying Ill. 286. It without the court’s decision to its from a change judgment reversal to an affirmance mandates that we address now Exelon’s other issue. appeal This involves Exelon’s claim 1996, for tax 1995 and years over a decade before the ef fective date of the utili majority’s holding that electric Thus, ties are retailers of tangible personal property. majority appellate judgment denying affirms the court’s Exelon the credit. How can this court possibly deny Exelon the credit on the first issue and then refuse to ad dress Exelon’s second on the basis that argument Exelon’s on the first issue qualification the credit argument? obviates the need to address Exelon’s second Given the court’s revisions on denial of rehearing, Exelon is entitled heard on clause uniformity to be its argument. Conclusion

IV sum, In should be and this court rehearing granted, long arguments. should at last address the Department’s case, There was an outcome in this and this court obvious long-standing precedent should its that electric apply utilities are in a service business and are not engaged tangible personal property. legitimate retailers of No to alter the tax treatment of fundamentally reason exists This precedents electric utilities after all this time. court’s engaged retailing are now that electric utilities are not Co.) primarily Gas & Coke and are (Peoples Light (Exelon). majority’s failure to engaged retailing this can be so ensures no end of headaches explain how but also only legislature, not for the and the court, considering ques likely spend years which will If the ago. tions to rest decades thought put Department’s and address the unwilling acknowledge It fact-finding. for further arguments, it should remand Exelon’s now address mandatory the court is also uniformity argument. clause reasons, I cannot join

For all of above rehearing. deny decision to majority’s (No. 105719 . ILLINOIS, Appel

THE PEOPLE OF THE STATE OF KLEPPER, v. lant and WALTER Cross-Appellee, Appellee Cross-Appellant. upon rehearing

Opinion March denial 2009 . Modified filed September 2009.

Case Details

Case Name: Exelon Corp. v. Department of Revenue

Court Name: Illinois Supreme Court

Date Published: Jul 15, 2009

Citation: 917 N.E.2d 899

Docket Number: 105582

Court Abbreviation: Ill.