Illinois Institute of Technology v. Skinner

• Decision Date: 21 May 1971
• Docket Number: No. 43209,43209
• Parties: , 54 A.L.R.3d 1 ILLINOIS INSTITUTE OF TECHNOLOGY, Appellee, v. Cal SKINNER, Jr., County Treasurer, et al., Appellants.
• Court: Illinois Supreme Court

Page 371

273 N.E.2d 371

49 Ill.2d 59, 54 A.L.R.3d 1

ILLINOIS INSTITUTE OF TECHNOLOGY, Appellee, v. Cal SKINNER, Jr., County Treasurer, et al., Appellants.

No. 43209.

Supreme Court of Illinois.

May 21, 1971.

Rehearing Denied Oct. 4, 1971.

William J. Cowlin, State's Atty., Woodstock (Thomas A. Henley, Jr., Asst. State's Green and Michael J. Sullivan, Woodstock, Atty., of counsel), for appellants.

Joslyn & Green, Woodstock (James R. of counsel), for appellee.

UNDERWOOD, Chief Justice.

This action was instituted by plaintiff, the Illinois Institute of Technology (I.I.T.), to enjoin defendants from collecting taxes on a 107-acre tract, including six major buildings, located in McHenry County. Plaintiff contended that the property was being used exclusively for school purposes, and was therefore exempt from taxation. (Ill.Rev.Stat.1967, ch. 120, par. 500.1; Ill.Const., art. IX, sec. 3.) Both parties appeal from the judgment of the McHenry County circuit court which found 67 acres, including the buildings, exempt from taxes for the second half of 1967 and subsequent years, and denied the exemption as to the other 40 acres. The revenue being involved, this court has jurisdiction of the direct appeal. 43 Ill.2d R. 302(a), Ill.Rev.Stat.1969, c. 110A, § 302(a).

The property at issue here was donated to I.I.T. by Union Oil Company of California on June 30, 1967, pursuant to an agreement that it would be used as a 'scientific research center and as an educational center for scientific and technological subjects.' Plaintiff maintains that it intends to develop a major auxiliary campus on the property, and that the full program is in the 'discussion stage.' One building consisting of approximately 12,000 square feet houses the power plant which serves the remaining five buildings, totaling approximately 92,000 square feet. The oil company had used the premises for laboratory research, and many rooms contained permanently installed fixtures. Plaintiff claims to have created 6 or 7 classrooms in 1967, and taught 6 courses with a total of 50 students. The parties stipulated that 3% Of the property 'was used for actual classroom and related uses' in 1967; it was admitted that no classes utilized the outside area in that year. The McHenry County Junior College utilized 1,500 square feet of office space during the year, under a lease from I.I.T., and 40 acres of land was leased to a farmer for crop purposes at a normal rate for the area. In the first semester of 1968, plaintiff held nine courses, with 60 students; 15 courses were taught in the second semester, involving approximately the same number of students. Plaintif also used one room as an office, conducted a research project involving an outdoor antenna, and used one half of one floor for storage. Under a new lease in 1968, the junior college paid $63,750 for the use of 51,000 square feet. Dr. Forest D. Etheredge, president of the college, explained that there was a flexible agreement whereby the college actually used up to 60,000 square feet. Various areas of the grounds were also used for archery and golf classes. The enrollment of the college totaled 1600 in 1968, of which 325 were full-time students. The parties stipulated that an average of 25% Of the property 'was used for actual classroom and related uses' in 1968; as to both 1967 and 1968, the parties further stipulated that no other use was made of the property except for the crop lease. It was also agreed that the stipulation would prevail in the event that it conflicted with the testimony as to those years.

On August 18, 1967, plaintiff filed an application with the board of review of McHenry County, seeking exemption of the entire property for the second half of 1967. The exemption was denied In toto on February 19, 1968, and plaintiff sought no further administrative relief before bringing the present action to enjoin taxation from June 30, 1967, onward. Defendants contend that as to 1968 and 1969, plaintiff has failed to exhaust its administrative remedy of application to the board of review (Ill.Rev.Stat.1967, ch. 120, par. 589(6)) and should therefore be denied judicial relief. However, as plaintiff points out, the statutory remedy is not exclusive. Two early decisions by this court clarify that equity may act to enjoin the taxation of exempt property, and that the statutory remedy is merely cumulative. In the initial case of Preston v. Johnson, 104 Ill. 625, the county board of review denied plaintiff's application for exemption, whereupon plaintiff brought a bill in chancery to enjoin collection of taxes on the exempt property. Noting that the legal remedy of appeal from the board's decision was available and adequate, the court held that the plaintiff having failed to appeal could not then seek relief by a bill in equity. The court affirmed the dismissal of the bill, stating in conclusion that, 'The remedy through the county board of review and by appeal we regard as adequate and exclusive.' (Preston v. Johnson, 104 Ill. 625, 630; but see Searing v. Heavysides, 106 Ill. 85.) Shortly thereafter, this court was constrained to clarify the above statement. The Illinois Central Railroad had brought a bill in equity to enjoin the collection of a tax assessed against certain of its property, which was exempt from taxation by reason of the railroad's charter. (Illinois Central R.R. Co. v. Hodges, 113 Ill. 323.) The trial court dismissed the bill upon the ground that the remedy at law was exclusive, under the authority of Preston v. Johnson.

This court reversed, explaining that a court of equity will enjoin collection of a tax upon exempt property, notwithstanding the availability of an adequate remedy at law by way of application to the board of review. The court further explained that where an application for relief is made before the board of review, in pursuance of the statutory remedy, then that remedy becomes exclusive when the board denies the application. The party 'can not then, after an adverse decision, go into chancery for relief,--and that was the case in Preston et al. v. Johnson, Supra. Having selected his forum,--one which affords a completely adequate remedy,--he must adhere to it. * * * If the party elect the remedy provided by this section, he will not be allowed to abandon it and then go into equity, but he may go into equity in the first instance, and have relief. * * * The (statutory) remedy is adequate, and when that forum is selected and its decision invoked, it becomes exclusive. In cases like the present, before a tribunal has been selected, it must be regarded as only affording a cumulative remedy.' (Illinois Central R.R. Co. v. Hodges, 113 Ill. 323, 326.) This proposition has been reiterated in subsequent decisions of this court, including Owens-Illinois Glass Co. v. McKibbin, 385 Ill. 245, 256, 52 N.E.2d 177, 182, cited by plaintiff, where it was stated, 'It is established that where a tax is unauthorized by law, or where it is levied upon property exempt from taxation equity will take jurisdiction and enjoin the collection of the tax. * * * It is also the rule in such cases that where remedies are provided by statute they are cumulative, and are exclusive only where they have been first invoked by the taxpayer.' (See also, Sanitary District of Chicago v. Young, 285 Ill. 351, 370, 120 N.E. 818, and cases cited therein.) We accordingly find no bar to the exercise of equity jurisdiction upon the exemption claim for 1968 and subsequent years. However, the plaintiff did choose to pursue the statutory remedy before the board of review as to the 1967 exemption claim. In our opinion, that claim was therefore not a proper subject for equity jurisdiction, and the judgment must be reversed insofar as it enjoins collection of the tax for 1967.

We now consider the merits of the exemption claimed for 1968 and thereafter. Plaintiff maintains that the entire 107-acre tract is entitled to exemption under sections 19 and 19.1 of the Revenue Act, which exempt, Inter alia, all property 'used for public school, college, theological seminary, university, or other educational purposes.' (Ill.Rev.Stat.1967, ch. 120, par. 500.1.) This provision implements section 3 of article IX of the Illinois constitution, which permits exemption by general law of property 'used exclusively' for school purposes. In arguing that the entire tract should be exempt, plaintiff proposes that its intention to develop in...