COUNTY BD. OF REVIEW v. Department of Rev.

• Citation: 790 N.E.2d 918,339 Ill. App.3d 230,274 Ill.Dec. 145
• Decision Date: 29 May 2003
• Docket Number: No. 2-02-0430.,2-02-0430.
• Parties: DU PAGE COUNTY BOARD OF REVIEW, Plaintiff-Appellant, v. The DEPARTMENT OF REVENUE OF the STATE OF ILLINOIS and Good Shepherd Evangelical Lutheran Church, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

790 N.E.2d 918

339 Ill. App.3d 230

274 Ill.Dec. 145

DU PAGE COUNTY BOARD OF REVIEW, Plaintiff-Appellant, v. The DEPARTMENT OF REVENUE OF the STATE OF ILLINOIS and Good Shepherd Evangelical Lutheran Church, Defendants-Appellees.

No. 2-02-0430.

Appellate Court of Illinois, Second District.

May 29, 2003.

Joseph E. Birkett, Du Page County State's Attorney, Margaret M. Healy, Robert G. Rybica, Assistant State's Attorneys, Wheaton, for Du Page County Board of Review.

Lisa Madigan, Attorney General, Joel D. Bertocchi, Janon E. Fabiano, Assistant Attorneys General, Chicago, for Department of Revenue of the State of Illinois.

Harold T. Rohlfing, Oak Park, for Good Shepard Evangelical Lutheran Church.

Justice GROMETER delivered the opinion of the court:

Plaintiff, the Du Page County Board of Review (Board), appeals a judgment affirming a decision by the Department of Revenue of the State of Illinois (Department) granting a tax exemption for real property owned by Good Shepherd Evangelical Lutheran Church (Good Shepherd or the church). The Board contends that the Department erred insofar as it held that a house for one of the church's schoolteachers is exempt under section 15-40 of the Property Tax Code (35 ILCS 200/15-40 (West 1998)). We agree. Therefore, we affirm in part and reverse in part.

On May 11, 1999, Good Shepherd, a member of the Wisconsin Evangelical Lutheran Synod, bought land improved with a detached garage and a house. The land is near the church's other property. On August 13, 1999, the church petitioned the Department to exempt its new property from taxation for 66% of the 1999 tax year. The Board contested the petition. We summarize the evidence from the hearing before the administrative law judge (ALJ).

Good Shepherd's first witness was Erik Guldberg, the president of its congregation. He testified as follows. When the congregation wishes to "call" a new teacher, it obtains a list of candidates from the synod. The voters' assembly then chooses a candidate, and the church sends her a "call letter." On March 8, 1999, the church sent a letter to Ellen Zank, "solemnly charg[ing]" her to instruct her students in "the chief truths of the Word of God[]" and otherwise to follow Christian principles. Also, the letter requires Zank to assist as the school's athletic director and to conduct the vacation Bible school. In return, the church promises to receive Zank as "a servant of Jesus Christ," to treat her accordingly, and (more mundanely) to pay her salary and provide her housing. On May 10, 1999, the congregation voted to require Zank to live in the house.

David Rutschow, Good Shepherd's senior pastor, testified that the "ministry" includes both the church and the school. He stated that "we're calling [pastors and teachers] to the ministry of our congregation, whether it be preaching or whether it be teaching ministry." A synod yearbook for 2001 lists Zank among the "Women in the Teaching Ministry."

A letter Rutschow wrote his attorney in August 2000 explains that the church calls pastors to the "preaching ministry" and teachers to the "teaching ministry." The teachers must instruct students in the standard secular subjects and in the Bible. Teachers must teach all subjects and administer all discipline in the light of the Bible.

The synod operates Martin Luther College in Minnesota, which trains pastors and teachers, both of whom are "presented to the church as candidates for the ministry" and receive their initial assignments from the synod. Teachers and pastors are called by the method Guldberg described.

Rutschow recounted that, on August 8, 1999, Zank was installed during a church service. The installation was conducted according to a form entitled "A Rite of Installation/Ordination of Teachers." Zank professed her faith in scripture and promised that her teaching would follow the appropriate religious doctrines.

Ellen Zank testified as follows. At Martin Luther College, she received religious education but no pastoral training. She arrived at Good Shepherd a month before her installation. Zank teaches kindergarten through second grade. Good Shepherd's teachers teach "all the subjects that you would find in any other school" and do so "in the light of God's word." Zank teaches specifically religious subjects an hour each day. She is the athletic director and helps with vacation Bible school.

Zank uses one of the two bedrooms in her house as a "school office," where she grades papers and does teaching-related work. However, the house is never used for meetings or other school activities. Unlike Zank, the principal and the other teachers reside in private homes.

The Board called David Rutschow. Asked why only Zank lives in church-owned housing, Rutschow replied that the other teachers already had their residences and that "we had a single teacher previously who left us through death * * *—she had been housed in an apartment because she was a single teacher." The congregation had paid this teacher's rent. Were Zank not living in the church-owned house, the congregation would give her a reasonable housing allowance. There were nearby apartment houses that the congregation believed were safe and well run.

The ALJ recommended exempting the property at issue under section 15-40, which at the pertinent time read:

"All property used exclusively for religious purposes, or used exclusively for school and religious purposes, or for orphanages and not leased or otherwise used with a view to profit, is exempt, including all such property owned by churches or religious institutions or denominations and used in conjunction therewith as housing facilities provided for ministers * * * performing the duties of their vocation as ministers at such churches or religious institutions or for such religious denominations * * *.

A parsonage, convent or monastery or other housing facility shall be considered under this Section to be exclusively used for religious purposes when the church * * * requires that the above listed persons who perform religious related activities shall, as a condition of their employment or association, reside in the facility." 35 ILCS 200/15-40 (West 1998).

The ALJ concluded that the house is used exclusively for a religious purpose because (1) Zank's "call" requires her to live there; and (2) Zank performs many of her job duties there. The ALJ did not decide whether the house is exempt as a housing facility for a "minister." The ALJ also held that the detached garage is exempt because it is reasonably necessary for the church to store church-related property there.

The Department adopted the ALJ's recommendation. The circuit court affirmed, although on the ground that the house was the residence of a "minister." The Board appeals.

The Board does not contest the exemption for the detached garage. However, it claims that Zank's home is not tax-exempt. The Board argues that because the facts are undisputed, the exemption issue is a question of law to be reviewed de novo. According to the Board, the Department erred as a matter of law in concluding that the house is "used exclusively for religious purposes" (35 ILCS 200/15-40 (West 1998)), as the house is primarily a residence. The Department responds that even though the facts are not in dispute, the Department's decision should not be reversed unless it is clearly erroneous—which, of course, in the Department's view, it is not.

We first address whether the Department's decision should be reviewed de novo or deferentially. The Board's assertion that this appeal raises an issue of law, to be reviewed de novo, is inherently plausible. Generally, whether a given set of historical facts satisfies a given constitutional or statutory standard is considered a question of law subject to de novo review. See, e.g., People v. Sims, 192 Ill.2d 592, 615, 249 Ill.Dec. 610, 736 N.E.2d 1048 (2000)

(whether given facts supply probable cause); People v. Lamborn, 185 Ill.2d 585, 590, 236 Ill.Dec. 764, 708 N.E.2d 350 (1999) (whether given photograph meets statutory definition of "lewd"); In re Marriage of Hughes, 322 Ill.App.3d 815, 818-19, 255 Ill.Dec. 929, 751 N.E.2d 23 (2001) (whether facts reflect "substantial change of circumstances" under child-support statute). Indeed, such was long the rule in property tax exemption cases. In 1996, our supreme court stated, "Where facts are undisputed, * * * whether property is exempt from taxation is a question of law." Chicago Patrolmen's Ass'n v. Department of Revenue, 171 Ill.2d 263, 271, 215 Ill.Dec. 655, 664 N.E.2d 52 (1996).

However, we agree with the Department that the supreme court has rewritten the rules for reviewing administrative agencies' decisions and has overruled the cited passage from Chicago Patrolmen's Ass'n. See Carpetland U.S.A., Inc. v. Illinois Department of Employment Security, 201 Ill.2d 351, 368-69, 267 Ill.Dec. 29, 776 N.E.2d 166 (2002). Under the new dispensation, whether given historical facts satisfy an established legal rule is a "mixed question of law and fact," and an agency's resolution of that question must stand unless it is "clearly erroneous." AFM Messenger Service, Inc. v. Department of Employment Security, 198 Ill.2d 380, 392-93, 261 Ill.Dec. 302, 763 N.E.2d 272 (2001); City of Belvidere v. Illinois State Labor Relations Board, 181 Ill.2d 191, 205, 229 Ill.Dec. 522, 692 N.E.2d 295 (1998). This rule of deference rests in part on agencies' experience and expertise in interpreting their governing statutes. AFM, 198 Ill.2d at 394-95,261 Ill.Dec. 302,763 N.E.2d 272. The "clearly erroneous" test applies to Department rulings in property tax exemption cases. Swank v. Department of Revenue, 336 Ill.App.3d 851, 860-61, 271 Ill. Dec. 553, 785 N.E.2d 204 (2003).

What the "clearly erroneous" test actually means in this context—what it requires a court of review to do—is perhaps ill-defined. Positing the existence of a "continuum" between de novo review of issues of law and...