Find Legal Information

13 October 2000

_____________________________________________________________________________________

_____________________________________________________________________________________

PRESIDING JUSTICE SLATER delivered the opinion of the court:

_____________________________________________________________________________________

The plaintiff, Lutheran Church of the Good Shepherd ofBourbonnais (the Church), filed a complaint in the circuit courtof Kankakee County for administrative review of a decision by theDepartment of Revenue of the State of Illinois (the Department). The Department denied a real estate tax exemption for two tractsof land owned by the Church. The circuit court initiallyreversed the Department's decision and granted the tax exemption. However, following a motion for reconsideration, the circuitcourt affirmed the Department. Plaintiff now appeals, and wereverse.

On July 24, 1997, the Church filed an application for aproperty tax exemption for the year 1997 for two parcels of landtotaling 3.347 acres (the subject property). The subjectproperty is adjacent to other Church land containing a worshipfacility, a parking lot and a 20 foot strip of grass. When thesubject property was acquired by the Church in 1996, crops weregrowing on the land. According to Paul Schultz, the chairman ofthe board of church properties, the Church did not plant crops onthe land in 1997 because it intended to use the property as aextension of the existing yard area. The yard was to be used asa playground or picnic area or for other recreational activities. After the crops were harvested in late 1996, nothing was done tothe subject property until August of 1997 when weeds that hadovergrown the property were mowed. In November the property wastilled in preparation for planting grass seed, but no seedingtook place due to unfavorable weather conditions.

Although the Kankakee County Board of Review recommendedapproval of the Church's tax exemption application, theDepartment denied the application on the basis that the propertywas "not in exempt use." The Church requested a formal hearing,which was held on April 17, 1998. Paul Schultz was the onlywitness, and he testified as indicated above. The administrativelaw judge subsequently recommended denial of the exemption andthe director of the Department accepted that recommendation onJanuary 27, 1999. The Church filed its complaint foradministrative review in the circuit court on March 4, 1999. Aspreviously indicated, after initially reversing the Department'sdecision, the court reconsidered its ruling and affirmed theDepartment's denial of the tax exemption.

The threshold issue in this case concerns the properstandard of review to be applied by this court to theDepartment's decision. See Richard's Tire Co. v. Zehnder, 295Ill. App. 3d 48, 692 N.E.2d 360 (1998) (noting that appellatecourt is to review the administrative decision, not the trialcourt's determination). The Church asserts that where, as here,the facts are undisputed, the issue of whether property is taxexempt is a question of law subject to de novo review. This viewis consistent with that expressed by our supreme court in severalcases. See Chicago Patrolmen's Ass'n v. Department of Revenue,171 Ill. 2d 263, 664 N.E.2d 52 (1996) (where facts areundisputed, determination of whether property is exempt fromtaxation is question of law); City of Chicago v. IllinoisDepartment of Revenue, 147 Ill. 2d 484, 590 N.E.2d 478 (1992)(same); Harrisburg-Raleigh Airport Authority v. Department ofRevenue, 126 Ill. 2d 326, 533 N.E.2d 1072 (1989) (same). TheDepartment, on the other hand, contends that the issue is a mixedquestion of fact and law and, pursuant to City of Belvidere v.Illinois State Labor Relations Board, 181 Ill. 2d 191, 692 N.E.2d295 (1998), a "clearly erroneous" standard is appropriate. InBelvidere the court held that the issue of whether the city ofBelvidere's decision to contract out for paramedic servicesaffected wages, hours and other conditions of city firefighter'semployment was a mixed question of fact and law.

Since Belvidere, decisions from various districts anddivisions of this court, when reviewing cases involving taxexemptions, have applied either a de novo standard (see, e.g.,First Presbyterian Church v. Zehnder, 306 Ill. App. 3d 1114, 715N.E.2d 1209 (2d Dist. 1999); Midwest Physician Group, Ltd. v.Department of Revenue, 304 Ill. App. 3d 939, 711 N.E.2d 381 (1stDist., 3d div. 1999); Mount Calvary Baptist Church, Inc. v.Zehnder, 302 Ill. App. 3d 661, 706 N.E.2d 1008 (1st Dist., 5thdiv. 1998); Alivio Medical Center v. Illinois Department ofRevenue, 299 Ill. App. 3d 647, 702 N.E.2d 189 (1st Dist., 4thdiv. 1998); Northwest Suburban Fellowship, Inc. v. Department ofRevenue, 298 Ill. App. 3d 880, 700 N.E.2d 102 (1st Dist., 6thdiv. 1998)), or a clearly erroneous standard (see Randolph StreetGallery v. Zehnder, ___ Ill. App. 3d ___, 735 N.E.2d 100 (1stDist., 3d div. 2000); Friends of Israel Defense Forces v.Department of Revenue, 315 Ill. App. 3d 298, 733 N.E.2d 789 (1stDist., 5th div. 2000) Metropolitan Water Reclamation District v.Department of Revenue, 313 Ill. App. 3d 469, 729 N.E.2d 924 (1stDist., 3d div. 2000); XL Disposal Corp. v. Zehnder, 304 Ill. App.3d 202, 709 N.E.2d 293 (4th Dist. 1999)).

"The selection of a proper standard ofreview is of far more than mere academicinterest. This decision largely determineswhich court will have the final word on aparticular issue. If we believe that anissue is fact-specific, we will usually trustthe trial court as fact-finder to render theproper decision; thus, we will select adeferential, 'clearly erroneous' standard.

If, however, we believe that an issueneeds to be decided uniformly throughout ajurisdiction's courts, we should opt for denovo review. As Judge Richard Posner hasnoted, a court should select de novo reviewif it desires to establish 'rules that willassure that cases with the same facts aredecided the same way by different judges.' The choice between these two approaches is acrucial policy decision ***." T. O'Neill andS. Brody, Taking Standards of AppellateReview Seriously: A Proposal to Amend Rule341, 83 Ill. B.J. 512, 516-17 (1995), quotingJohnson v. Trigg, 28 F. 3d 639, 645 (7th Cir.1994).

In this case we believe that the clearly erroneous standardof review is appropriate, for three reasons. First, to qualifyfor a tax exemption the Church must show that the subjectproperty is "used exclusively for religious purposes." 35 ILCS200/15--40 (West 1996). Property satisfies the exclusive-userequirement if it is primarily used for the exempted purpose. McKenzie v. Johnson, 98 Ill. 2d 87, 456 N.E.2d 73 (1983). Thus,"[w]hether a particular [property] may be entitled to exemptionturns on the evidence showing how the [property] is being used." McKenzie, 98 Ill. 2d at 100, 456 N.E.2d at 79. Given thenecessarily fact-based nature of this inquiry, we do not believede novo review would be proper.

Second, Belvidere held that the clearly erroneous standardshould be applied to mixed questions of fact of law, which itreferred to as "involv[ing] an examination of the legal effect ofa given set of facts." Belvidere, 181 Ill. 2d at 205, 692 N.E.2dat 302. Such mixed questions have also been described as"questions in which the historical facts are admitted orestablished, the rule of law is undisputed, and the issue iswhether the facts satisfy the statutory standard." Pullman-Standard v. Swint, 456 U.S. 273, 289 n.19, 72 L. Ed. 2d 66, 80n.19, 102 S. Ct. 1781, ___ n.19 (1982). This case appears tofall squarely within that definition, since it requiresdetermining whether the uncontested facts satisfy the statutoryexclusive-use requirement.

Third, the clearly erroneous standard grants a degree ofdeference to the Department that is not present in de novoreview. This deference acknowledges the Department's expertiseand credits its experience in such matters. See Abrahamson v.Illinois Department of Professional Regulation, 153 Ill. 2d 76,606 N.E.2d 1111 (1992) (courts give substantial weight anddeference to agencies' statutory interpretations based on theirexperience and expertise).

For these reasons, we will not disturb the Department'sruling unless it is clearly erroneous, a standard of review thatlies between a manifest weight of the evidence standard and denovo review. Belvidere, 181 Ill. 2d 191, 692 N.E.2d 295. Underthat standard, we must accept the Department's decision unless weare left with the definite and firm conviction that a mistake hasbeen committed. Friends of Israel, 315 Ill. App. 3d 298, 733N.E.2d 789; see also Pullman--Standard, 456 U.S. at 284 n.14, 72L. Ed 2d at 77 n.14, 102 S. Ct. at ____ n.14.

We now consider whether the Department properly denied theChurch's application for a tax exemption. Statutes exemptingproperty from taxation are to be strictly construed in favor oftaxation (Chicago Patrolmen's Ass'n, 171 Ill. 2d 263, 664 N.E.2d52), and all facts are to be construed and all debatablequestions resolved in favor of taxation (City of Chicago, 147Ill. 2d 484, 590 N.E.2d 478). The burden of proving the right toa tax exemption rests upon the party seeking it. City ofChicago, 147 Ill. 2d 484, 590 N.E.2d 478. The statutoryprovision at issue here provides in part:

"