American Nat. Bank and Trust Co. v. Department of Revenue

Decision Date23 March 1993
Docket NumberNo. 2-92-0323,No. 55055,55055,2-92-0323
Citation242 Ill.App.3d 716,611 N.E.2d 32,183 Ill.Dec. 179
Parties, 183 Ill.Dec. 179 AMERICAN NATIONAL BANK AND TRUST COMPANY, Trust, et al., Plaintiffs-Appellees, v. The DEPARTMENT OF REVENUE, Defendant-Appellant.
CourtUnited States Appellate Court of Illinois

Roland W. Burris, Atty. Gen. of Illinois, Susan Frederick Rhodes, Asst. Atty. Gen. and Rosalyn B. Kaplan, Sol. Gen. of Illinois, Chicago, for Illinois Dept. Revenue.

Scott A. Nolan, McHenry, for American Nat. Bank & Trust and Jack Kristof, Beneficiary.

Justice QUETSCH delivered the opinion of the court:

Plaintiff Jack Kristof was the beneficial owner of a one-half interest in plaintiff American National Bank and Trust Company, trust No. 55055, which owned a parcel of property in McHenry County, Illinois. Plaintiff Zion's Lighthouse, Inc. (Zion), leased this property and used it for religious purposes. Defendant, the Department of Revenue (Department), denied plaintiffs' application for a religious tax exemption for the property under section 19.2 of the Revenue Act of 1939 (Ill.Rev.Stat.1989, ch. 120, par. 500.2). Plaintiffs then filed a complaint in the trial court for administrative review (Ill.Rev.Stat.1991, ch. 110, par. 3-103). Without expressly reversing the Department's order, the trial court entered judgment for the plaintiffs and granted the exemption. The Department appeals, claiming that because Kristof leased the property to Zion for a profit, the property is not exempt from taxation.

On June 14, 1989, Kristof and Zion entered into an agreement whereby Kristof leased the property to Zion for $3,200 per month. Zion had an option to buy the property. The agreement provided that if Zion purchased the property prior to July 30, 1990, Kristof would credit Zion $2,000 for every $3,200 rental payment that Zion had made. If Zion made a $100,000 down payment prior to the July 30, 1990, closing, Kristof would refund all of the rental payments that Zion had made. Under the agreement, Zion was responsible for paying any property taxes. As of the March 12, 1991, administrative hearing, Zion had not purchased the property but continued to lease the property from Kristof. The property was up for sale on the open market, although Zion had the right to meet any offer and still intended to purchase the property.

The property contained a large building, a smaller building, a parking lot, and open space. During the relevant time period, Zion was a church with a 50-member congregation. Zion used the large building for religious activities, including church services, Sunday school, and religious counseling. Dan Blankenship, Zion's head pastor, used a portion of the large building as a residence, although Zion did not require that he live there. He used part of the residence as an office where he prepared sermons. He also counseled members of the congregation in the residence. The smaller building was used as a storage shed by both Zion and Kristof. Congregation members parked in the parking lot while they were attending religious activities on the property.

On February 14, 1990, the McHenry County Board of Review recommended denying plaintiffs' application for a property tax exemption for the period of July 1, 1989, to December 31, 1989. On April 6, 1990, the Department denied the plaintiffs' application for the exemption. Plaintiffs then requested a formal hearing before an administrative law judge. The hearing was held on March 12, 1990. On April 16, 1990, the Department issued a hearing disposition denying the exemption. The Department based its decision on its finding that Kristof, as an owner of the property, leased the property for a profit.

On May 17, 1991, plaintiffs filed a complaint for administrative review in the trial court. Plaintiffs did not materially disagree with the Department's findings of fact. Rather, at the core of plaintiffs' complaint was their argument that Zion's use of the property for religious purposes entitled them to the exemption under section 19.2 even though Zion did not own the property. The trial court entered its order on February 20, 1992, granting judgment for the plaintiffs and granting plaintiffs a property tax exemption for July 1, 1989, through December 31, 1989. The Department appeals from that order.

Plaintiffs filed no brief in this appeal. Therefore, we will review this appeal under the standards set forth in First Capitol Mortgage Corp. v. Talandis Construction Corp. (1976), 63 Ill.2d 128, 133, 345 N.E.2d 493.

As a preliminary matter, the trial court had no authority to enter a judgment granting an exemption. The trial court's authority in reviewing administrative decisions is limited to the powers expressed in the Administrative Review Law (Ill.Rev.Stat.1991, ch. 110, par. 3-101 et seq.). (Momney v. Edgar (1990), 207 Ill.App.3d 26, 29, 152 Ill.Dec. 4, 565 N.E.2d 246.) The trial court's powers, which are enumerated in section 3-111 of the Administrative Review Law, do not extend to granting or denying relief but are essentially limited to reviewing the decision of the administrative agency. (Ill.Rev.Stat.1991, ch. 110, par. 3-111.) Therefore, if the judgment of the trial court is interpreted literally it is void because the trial court lacked the inherent authority to grant the relief therein. People v. Sales (1990), 195 Ill.App.3d 160, 162-63, 141 Ill.Dec. 831, 551 N.E.2d 1359.

In Sales, we held that the trial court's order directing the Secretary of the State to issue a restricted driving permit (RDP) to defendant was void because it exceeded the trial court's authority and violated the separation of powers. Defendant in Sales pleaded guilty to aggravated criminal sexual abuse. Such a conviction required the Secretary to revoke defendant's driver's license. (Sales, 195 Ill.App.3d at 161, 141 Ill.Dec. 831, 551 N.E.2d 1359; Ill.Rev.Stat.1987, ch. 95 1/2, par. 6-205(b)(2).) On defendant's motion, however, the trial court ordered the Secretary to issue defendant an RDP so that the defendant could attend counselling and work. We determined that the trial court lacked jurisdiction to enter such an order because the issuance of an RDP was within the Secretary's discretion. Because its authority to issue an RDP was limited by statute, the trial court lacked the inherent power to direct the Secretary to issue an RDP. Sales, 195 Ill.App.3d at 162-63, 141 Ill.Dec. 831, 195 Ill.App.3d 160. A court's order must be construed in a reasonable manner, however, with reference to other parts of the record including the pleadings, so as to give effect to the apparent intention of the trial court. (Granville Beach Condominium Association v. Granville Beach Condominiums, Inc. (1992), 227 Ill.App.3d 715, 720, 169 Ill.Dec. 673, 592 N.E.2d 160.) Technical deficiencies in a judgment can be corrected if such correction does not prejudice the parties. (City of Chicago v. American National Bank & Trust Co. (1988), 171 Ill.App.3d 680, 687, 121 Ill.Dec. 608, 525 N.E.2d 915.) Supreme Court Rule 366(a)(3) empowers the reviewing court to amend the record to correct errors. 134 Ill.2d R. 366(a)(3).

People ex rel. Illinois Department of Human Rights v. Arlington Park Race Track Corp. (1984), 122 Ill.App.3d 517, 523-24, 77 Ill.Dec. 882, 461 N.E.2d 505, discusses the reviewing court's ability to modify an otherwise void order under Rule 366(a)(3). In Arlington Park, the Department of Human Rights petitioned the trial court to enjoin defendant permanently from committing alleged human rights violations during the pendency of the lawsuit. The trial court granted the permanent injunction even though it was only empowered by statute to grant a temporary or preliminary injunction. The reviewing court refused to enter a nunc pro tunc order under Rule 366(a)(3) correcting the trial court's order so that it would be within the scope of the trial court's authority. The court determined that the trial court's order was not merely an inaccuracy or omission. (Arlington Park, 122 Ill.App.3d at 524, 77 Ill.Dec. 882, 461 N.E.2d 505.) According to the court, the trial court's order was "an entirely accurate reflection of what the trial court ordered" and what one of the parties had requested. Arlington Park, 122 Ill.App.3d at 524, 77 Ill.Dec. 882, 461 N.E.2d 505.

Contrary to Arlington Park and Sales, the trial court in this case seems to have phrased its order as it did out of inadvertence and not out of a deliberate exercise of power beyond the scope of the Administrative Review Law. Section 3-111(a)(5) of the Administrative Review Law authorizes trial courts to reverse or affirm decisions of administrative agencies. (Ill.Rev.Stat.1991, ch. 110, par. 3-111(a)(5).) In this case, therefore, regardless of whether reversing the Department's decision would have been error, it would have been within the trial court's jurisdiction. In addition, because the Department denied plaintiffs' application for a property tax exemption, reversing the Department would have had the same effect as granting the tax exemption. Conversely, the trial court's order granting the exemption, if it had been appropriate, would have had the same effect as reversing the Department's decision. Because none of the relevant facts were disputed, the trial court's determination turned on the resolution of a question of law, not on a review of the agency's factual findings. From the trial court's perspective, therefore, the resolution of the issues in the cause was tantamount to a de novo review of the legal issues. (Lutheran Child & Family Services v. Department of Revenue (1987), 160 Ill.App.3d 420, 423, 112 Ill.Dec. 173, 513 N.E.2d 587; Benedictine Sisters of the Sacred Heart v. Department of Revenue (1987), 155 Ill.App.3d 325, 327, 108 Ill.Dec. 309, 508 N.E.2d 470.) Although the trial court's phrasing of its order was grossly inaccurate in light of the trial court's limited powers under the Administrative Review Law, the substantive effect of the order...

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