United Legal Foundation v. Department of Revenue

• Decision Date: 31 March 1995
• Docket Number: No. 1-94-0879,1-94-0879
• Parties: , 209 Ill.Dec. 91 UNITED LEGAL FOUNDATION et al., Plaintiffs-Appellees, v. The DEPARTMENT OF REVENUE, et al., Defendants (Oak Park Investments, Inc., Defendant-Appellant).
• Court: United States Appellate Court of Illinois

Page 1064

650 N.E.2d 1064

272 Ill.App.3d 666, 209 Ill.Dec. 91

UNITED LEGAL FOUNDATION et al., Plaintiffs-Appellees, v. The DEPARTMENT OF REVENUE, et al., Defendants (Oak Park Investments, Inc., Defendant-Appellant).

No. 1-94-0879.

Appellate Court of Illinois First District, Fifth Division.

March 31, 1995.

Rehearing Denied May 26, 1995.

Jonathan L. Smith, Balin, Smith & Associates, Inc., Chicago for appellants.

Rufus Cook, Cook Partners Law Offices, Ltd., Barbara E. Pitts, Asst. Atty. Gen., Chicago, for appellees.

Justice THOMAS J. O'BRIEN delivered the opinion of the court:

Plaintiffs, the United Legal Foundations and the Elijah Muhammad Foundation (collectively, the Foundations), obtained a preliminary injunction against defendant Oak Park Investments, Inc. (Oak Park). The circuit court enjoined Oak Park from proceeding on its petition for the issuance of a tax deed. Oak Park challenges the propriety of the injunction. We reverse.

Background

The Foundations acquired certain properties in 1989. In January 1991, the Foundations filed applications for tax exemptions for the property for the year 1990. The Cook County Board of Appeals denied the applications, and the Foundations sought a hearing from the Department. The Department conducted a hearing and affirmed the Board of Appeals' denial on January 13, 1993. The Foundations filed a complaint for administrative review of the Department's decision on February 17, 1993. In addition to naming the Department as a defendant, the Foundations also named Thomas C. Hynes, Cook County Assessor, Edward Rosewell, Cook County Treasurer, and David Orr, Cook County Clerk (collectively, County defendants) as defendants. The Foundations alleged that the County defendants illegally had assessed the property during the time the exemption applications were under consideration. They further claimed the County defendants had treated the property as delinquent by "offering [them] for sale for alleged delinquent taxes." The Foundations also challenged the Department's findings as to the Foundations' status as charitable organizations as well as the Department's findings regarding the use of the property during the time in question.

Eleven months passed without any significant action in the case. On January 25, 1994, the Foundations moved for summary judgment and a preliminary injunction. In the motion, the Foundations claimed several of the parcels subject to administrative review had been sold, with the redemption period to expire on February 14, 1994. They also asserted they were without funds to redeem any of the property. The Foundations maintained they were entitled to injunctive relief because they were without a remedy at law and would suffer irreparable injury in losing the property. The Foundations identified Oak Park as one of the tax buyers.

The circuit court permitted the Foundations to amend their complaint to include as defendants the various tax buyers who had purchased the back taxes of the lots at issue. The Foundations again sought administrative review against the Department and requested injunctive relief against the County defendants and the tax buyers. Ultimately, the Foundations filed a three count second amended complaint. In Count I, the Foundations sought administrative review of the Department's decision regarding the tax exempt status of the property. Count II sought injunctive relief against the County defendants, and Count III sought injunctive relief against Oak Park and various other tax buyers.

In its motion to dismiss, Oak Park maintained that it had purchased the property at the annual tax sale held on February 24, 1993. The sale was conducted pursuant to a circuit court order of judgment and sale. Oak Park argued the Foundations' injunctive action constituted an improper collateral attack on the judgment and sale proceedings. Oak Park claimed it had filed a tax deed petition on July 1, 1993, of which the Foundations had notice. The Foundations did not deny receiving notice.

The circuit court indicated that it would hear and decide the administrative review portion of the second amended complaint at a later date. However, the court stayed the effect of the Department's denial of the Foundations' applications for tax exemption. ¹

As to Oak Park and the County defendants, the circuit court ruled the Foundations had met the requirements for a preliminary injunction, concluding that they would suffer irreparable harm in the loss of the property. The court found the Foundations had a protectable interest in the property, were without an adequate remedy at law, and were likely to succeed on the merits. The court enjoined Oak Park from procuring the forfeiture of plaintiffs' "rights regarding the tax proceedings which are the subject hereof" or procuring "the issuance of a tax deed respecting the subject property * * *." The order further "tolled and stopped the running of the period of plaintiffs' redemption respecting the tax sale * * * until resolution of this cause." In other words, the injunction prohibited Oak Park from obtaining its tax deed until the circuit court completed its administrative review of the Department's denial of the Foundations' application for tax exemption. Oak Park appealed.

Analysis

Both the Department and Oak Park maintain the circuit court improperly granted the preliminary injunction because the court only had jurisdiction to review the propriety of the Department's exemption decision. We disagree.

Although section 138 of the Revenue Act of 1939 (35 ILCS 205/138 (West 1992) now 35 ILCS 200/8-40 (West 1994 Supp.)) ² gives the circuit court the power to review final decisions rendered by the Department, the preliminary injunction which is the subject of this appeal had nothing to do with the administrative review action. The circuit court here allowed the Foundations to amend their administrative review complaint to include separate counts for injunctive relief against defendants other than the Department. The circuit court is vested with the power to grant injunctive relief. (See 735 ILCS 5/11-101 (West 1992)). As such, the circuit court did not go beyond its jurisdiction in granting the injunction.

Oak Park next challenges the issuance of the injunction. It asserts the Foundations used the injunction action to improperly mount a collateral attack upon the separate tax delinquency proceedings which were ongoing during the course of the exemption application procedure. Oak Park contends that the Revenue Act provided the Foundations with the means with which to protect their interests in the property while the application period was pending. The Foundations, it asserts, did not avail themselves of those remedies and cannot now seek equitable relief. The Foundations respond that they acted in accordance with the Revenue Act in applying for the exemptions. They maintain the County defendants were unauthorized to treat the property as delinquent and equitable relief is appropriate given the circumstances in this case.

A party seeking an injunction must establish that it (a) possesses a certain and clearly ascertainable right which requires protection, (b) will suffer irreparable injury if the injunctive relief is denied, and (c) lacks an adequate remedy at law. (Local 1894 v. Holsapple (1990), 201 Ill.App.3d 1040, 1045, 147 Ill.Dec. 404, 559 N.E.2d 577.) Another factor often cited is the balancing of the relative convenience and injuries to the parties. (Board of Trustees of Community College District No. 508 v. Bakalis (1978), 64 Ill.App.3d 967, 21 Ill.Dec. 732, 382 N.E.2d 26.) The granting of injunctive relief is within the discretion of the circuit court. (Regional Transportation Authority v. Burlington Northern, Inc. (1981), 100 Ill.App.3d 779, 784, 55 Ill.Dec. 818, 426 N.E.2d 1143.) Upon review, this court must determine whether the court correctly exercised its broad discretionary powers. (Wessel Co. v. Busa (1975), 28 Ill.App.3d 686, 690, 329 N.E.2d 414.) An abuse of discretion occurs if the circuit court's decision is found to be against the manifest weight of the evidence. Jefco Laboratories, Inc. v. Carroo (1985), 136 Ill.App.3d 793, 91 Ill.Dec. 513, 483 N.E.2d 999.

Generally, courts will not grant injunctive relief in tax cases because the legislature has created a statutory scheme in which the remedies are contained. (Finn v. Tucker (1980), 81 Ill.App.3d 1038, 37 Ill.Dec. 468, 402 N.E.2d 358.) The resolution of the issues raised by the parties requires this court to examine the various procedures of the Revenue Act which were employed in this case in light of the injunctive relief principles cited above.

The Exemption Applications

At the time the Foundations applied for tax exempt status, the procedure was governed by section 19.7 of the Revenue Act. (Ill.Rev.Stat.1989, ch. 120, par. 500.7) The Foundations applied to the Board of Appeals, which, in February or March 1991, transferred the "Statement of Facts in Exemption Application" for the parcels at issue for the calendar year 1990 to the Department, pursuant to section 119 of the Revenue Act. (See Ill.Rev.Stat.1989, ch. 120, par. 600.) On June 7, 1991, the Department notified the Foundations that it had denied the applications. (Ill.Rev.Stat.1989, ch. 120, par. 600.) Pursuant to section 137, the Foundations requested a hearing from the Department concerning the exemption decision. (Ill.Rev.Stat.1989, ch. 120, par. 618 (allowing "any party who feels aggrieved" by the Department's decision to request a hearing within 20 days of the decision).) Section 137 requires that such a hearing be held before any judicial review of an exemption decision may be entertained. (Ill.Rev.Stat.1989, ch. 120, par. 618.) In this case, the Department confirmed its denial of the Foundations' application after it conducted the hearing. Following that decision in January 1993, the Foundations sought judicial review of the decision in accordance with ...