Chicago Patrolmen's Ass'n v. Department of Revenue

JUSTICE RAKOWSKI,

dissenting:

All property is subject to taxation unless specifically exempted by statute. (Rogers Park Post No. 108 v. Brenza (1956), 8 Ill. 2d 286, 289-90, 134 N.E.2d 292.) In determining whether a use is included within the scope of an exemption, all debatable questions are to be resolved in favor of taxation. (Board of Certified Safety Professionals of the Americas, Inc. v. Johnson (1986), 112 Ill. 2d 542, 547, 494 N.E.2d 485.) Every presumption is against the intention of the legislature to exempt a use from taxation. (United Air Lines, Inc. v. Johnson (1981), 84 Ill. 2d 446, 456, 419 N.E.2d 899.) The person claiming the exemption has the burden of proving "clearly and conclusively” that he is entitled to the exemption. (People ex rel. County Collector v. Hopedale Medical Foundation (1970), 46 Ill. 2d 450, 462, 264 N.E.2d 4.) "In applying the law to the facts, the court must be mindful that taxation is the rule. Tax exemption is the exception. Article IX, section 6 (Ill. Const. 1970, art. IX, § 6), and any statutes enacted under its provisions must be resolved in favor of taxation.” (Chicago Bar Association v. Department of Revenue (1994), 163 Ill. 2d 290, 301.) It is with this strict standard that the intent of the legislature must be determined.

In pertinent part, section 19.7 of the Illinois Revenue Act (Ill. Rev. Stat. 1987, ch. 120, par. 500.7) provides:

"All property of [charitable organizations] *** when such property is actually and exclusively used for such charitable or beneficent proposes, shall be entitled to an exemption.” (Emphasis added.)

The statute clearly sets forth a two-prong requirement for exemption entitlement. The property must be owned by a charitable organization and exclusively used for charitable purposes. {Pontiac Lodge No. 294 v. Department of Revenue (1993), 243 Ill. App. 3d 186, 190, 611 N.E.2d 62.) In accord, the court in Christian Action Ministry v. Department of Local Government Affairs, citing Hoffman v. Lehnhausen (1971), 48 Ill. 2d 323, 326, 269 N.E.2d 465, and Coyne Electrical School v. Paschen (1957), 12 Ill. 2d 387, 397, 146 N.E.2d 73, stated that "charitable use and ownership by a charitable organization are the requirements for a charitable tax exemption on property.” Christian Action Ministry v. Department of Local Government Affairs (1978), 74 Ill. 2d 51, 61, 383 N.E.2d 958.

As the Museum’s use of 98% of the property is for charitable purposes, the second prong of the test has been clearly satisfied. I respectfully submit, however, that because the Museum’s ownership of the property is only partial, it has not met the first-prong ownership requirement.

It is clear that the CPA is not a charitable organization and that it owns an undivided 50% beneficial interest in trust. Keeping in mind the strict standard to be applied, I fail to understand how the subject property can be said to be "of’ or owned by a charitable organization. I could understand a 49% exemption. At least that would be logically consistent with the statute (although I question whether section 19.7 would authorize such an apportionment). A 98% exemption, however, is neither logical nor in accord with the strict statutory requirement.

The majority opinion admits that there is not any authority for the proposition that property which is partially owned by a noncharitable organization is entitled to an exemption. However, the majority reasons that if the CPA owned all of the property and leased it without charge to the Museum, the property would be exempt. Although not cited by the majority, there is authority for such a proposition. In an analysis of what constitutes ownership for purposes of section 19.7, we have held:

"Title refers only to a legal relationship, while ownership is comparable to control. [Citation.] The term 'owner’ may include one who has the control or occupation of land with a claim of ownership.” (Wheaton College v. Department of Revenue (1987), 155 Ill. App. 3d 945, 947, 508 N.E.2d 1136.)

Accordingly, if there was a lease in the case sub judice, the noncharity CPA would transfer many of its rights to the Museum. The charitable organization (Museum) would then possess 100% of the control and occupation of the property. If this was the case, an exemption may be proper. However, in the case sub judice, there is not any lease at all let alone one that would qualify the Museum as an owner of the property. Nor is it proper to assume such a lease. Under the majority’s interpretation, the CPA receives the benefit of an exemption yet it does not relinquish any right to control. I submit that the legislature could not have intended such a result.

In sum, I agree with the majority that forms of ownership other than fee simple (contract purchaser, beneficiary of a land trust, holder of an easement and under certain circumstances, a lessee) are sufficient to constitute ownership. I also agree that if there was a lease giving the Museum a sufficient amount of control to qualify it as an owner, the property could very well be entitled to an exemption. I cannot agree, however, that a 50% beneficial interest holder possesses the amount of control necessary to constitute ownership for purposes of section 19.7. Although the majority refers to the Department’s interpretation as unfair and rigid, I believe it to be in accord with the aforementioned strict statutory standard.

For all of the aforementioned reasons, I would reverse the order of the circuit court and reinstate the February 26, 1990, decision of the Department of Revenue which denied the exemption.