People ex rel. Olmsted v. Univ. of Illinois

• Decision Date: 09 February 1928
• Docket Number: No. 18111.,18111.
• Citation: 159 N.E. 811,328 Ill. 377
• Parties: PEOPLE ex rel. OLMSTED, County Collector, v. UNIVERSITY OF ILLINOIS.
• Court: Illinois Supreme Court

328 Ill. 377

159 N.E. 811

PEOPLE ex rel. OLMSTED, County Collector,

v.UNIVERSITY OF ILLINOIS.

No. 18111.

Supreme Court of Illinois.

Dec. 21, 1927.

Rehearing Denied Feb. 9, 1928.

Application by the People, on the relation of G. Stanley Olmsted, County Collector, for sale of certain lands for delinquent taxes, wherein the University of Illinois filed objections. Judgment sustaining the objections, and the collector appeals.

Reversed and remanded, with directions.

Appeal from Vermilion County Court; William T. Henderson, judge.

Elmer O. Furrow, State's Atty., and Lewman & Carter, all of Danville (John H. Lewman and O. W. Longenecker, both of Danville, of counsel), for appellant.

Oliver A. Harker, of Champaign, Arthur R. Hall, of Danville, and Sveinbjorn Johnson, of Urbana, for appellee.

STONE, J.

This is an appeal from the judgment of the county court of Vermilion county sustaining the objections of the trustees of the University of Illinois to the application of the county treasurer for sale of certain lands for delinquent taxes. The objections filed are based upon two grounds: First, that the property belongs to the state; and, second, that it is used exclusively for school purposes. The county court sustained the objections of the appellee, and the collector brings the cause here for review.

It appears from the record that on March 13, 1923, Joseph Carter and June P. Carter, his wife, executed a deed of trust to the trustees of the University of Illinois conveying approximately 350 acres of land in Vermilion county, ‘to constitute a trust fund for all time for a twofold educational purpose: (a) For the education of young men and young women as hereinafter set forth; and (b) for the improvement of the agriculture of Illinois by example and by experiment as hereinafter set forth.’ The land consists of two farms. The deed of trust provided that the land should be held by the trustees of the University of Illinois and their successors in office ‘in perpetuity, solely for the educational purposes hereinafter specified and declaredby the grantors.’ The deed contains four clauses under the head of ‘Inducements for Trust.’ These clauses set out that, the grantors having by mutual consent decided to make a disposition of part of their joint property which they had by industry collected, and the University of Illinois seeming to them to be an ideal institution for the training of young men and young women, the grantors desired to give the real estate to the University of Illinois, and to put the net income of the same as a trust property forever under the control of the board of trustees of the University of Illinois and their successors in office for the uses and purposes set forth in the deed. The deed also contains a declaration of trust, consisting of 19 clauses, designed to carry out the purposes of the grantors as hereinbefore mentioned. In substance, the third to ninth clauses, both included, provide that the two separate farms shall forever remain intact, and be under the direction and control of the board of trustees of the University of Illinois and their successors in office, and that said board shall delegate to a trust committee, consisting of the president of the university, dean of the college of agriculture, dean of the college of engineering, and dean of the department of home economics, the management and control of the farms. These committeemen are to receive no compensation for their services, except that the dean of the agricultural college, or some one representing him, shall be repaid the expense of making necessary trips to the farms for inspection and supervision. The committee is required to manage the trust farms in the best manner to get the largest permanent income during the centuries, and to keep the farms and their appurtenances in good condition. It is directed that all of the income from the farms, after paying the necessary expenses and for repairs, shall go to the trust fund, and be used for the purposes declared in the trust, which are disclosed to be, ‘to aid worthy people, while students of the University of Illinois, in the manner hereinafter provided.’

Clause 11 authorizes the trustees to loan, out of the net income and trust estate, a sum of money, not exceeding $500 per annum, to any student who has been for at least one year a student in the University of Illinois, and who is studying chiefly in any of the mechanical, engineering, agricultural, natural history, chemical, or home economics courses, whose future seems promising, and whose habits and character are above reproach. These loans are to be made upon such terms and security as the trustees may prescribe, and are not to exceed $2,000 to any one student. Clause 12 requires that the trustees collect interest on such loans and the principal when due, and that all money so collected shall be turned into the fund, to be again used as loans to students. Clause 13 provides that the judge of the circuit court of Champaign county shall be the arbitrator of any disputes concerning the trust estate, and that court is authorized and requested to see that the trust is faithfully administered, and, if at any time any member of the trust committee refuses to serve, or for any reason cannot serve as a member of the committee, the court shall appoint in his place some other member of the faculty from the same college or department of the University of Illinois. Clause 14 provides that the board of trustees and their successors in office, by whatever name they may be known, shall be, and continue to be, the grantee in the deed. Clause 16 provides that, should conditions arise making the carrying out of the terms of the trust contrary to, or incompatible with, public policy or the welfare of the state, then, in case the circuit court of Champaign county so decides, in may, upon application of the grantee and request of the committee, order the property sold and the proceeds reinvested in other good real estate of equal value, to be held for the same purposes, and, if this cannot be done, then to be invested in some safe and stable income-producing securities, the net income of which shall be controlled and used by the grantee in the same manner as providedfor the income from the farms. Clause 17 provides that, in case the net income from the trust becomes at some time in the remote future so unreasonably large as to make it impracticable to use all of the trust income for loans to students, then, in case the circuit court of Champaign county should, on petition of the grantee, with the consent of the committee, so find, it may order such surplus income to be used by the grantee for the purpose of agricultural research work and home economics research work through the University of Illinois. Clause 19 provides:

‘Subject to the foregoing provisions in paragraphs 16 and 17, this grant is made on the express condition that said corporate body to whom said real estate is herein conveyed shall never sell nor convey to other parties the real estate herein granted and conveyed to it, but that said corporate body shall hold said lands as a public trust forever for the educational purposes hereinabove described.’

The appellee formally accepted this trust by resolution.

By section 3 of article 9 of the Constitution it is provided that:

‘The property of the state, counties, and other municipal corporations, both real and personal, and such other property as may be used exclusivelyfor agricultural and horticultural societies, for school, religious, cemetery and charitable purposes, may be exempted from taxation; but such exemption shall be only by general law.’

Section 2 of the Revenue Act (Smith-Hurd Rev. St. 1927, c. 120), in prescribing what property shall be exempt from taxation, provides by its second clause as follows:

‘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.’

The fifth clause exempts ‘all property of every kind belonging to the state of Illinois.’ These are the provisions of the Revenue Law which appellee contends are applicable. Two questions therefore arise and will be treated in the following order: First, does the property conveyed by the deed of trust in this case belong to the state of Illinois? Second, is it used exclusively for school and religious purposes, and not leased or otherwise used with a view to profit? An affirmative answer to either of these questions sustains the exemption, but, if both must be answered in the negative, the property is not exempt for the reasons raised in the objections filed to the county treasurer's application for sale.

Does this property belong to the state? The University of Illinois was founded by an act of the Legislature approved February 28, 1867 (Pub. Laws 1867, p. 123), as the Illinois Industrial University. In 1885 (Laws 1885, p. 252), its name was changed to the University of Illinois. It is maintained by interest from its permanent endowment fund arising from grants of land from the United States and by appropriations made by the General Assembly. It is governed by a board of trustees elected by the people. Though the state has created a body corporate to control the University of Illinois, yet the state retains the power of selecting trustees, and may, through other agents than the trustees, sell and dispose of the property of the institution or change its charter as the Legislature may direct. The property of the University of Illinois, though held by the board of trustees, belongs to the state. People v. Board of Trustees, 283 Ill. 494, 119 N. E. 595;Spalding v. People, 172 Ill. 40, 49 N. E. 993;Board of Trustees v. Champaign County, 76 Ill. 184;Thomas v. Industrial University, 71 Ill. 310. While the state, through its board of trustees, is virtually a trustee of the property and funds of the university for the use of the people,...