APPEAL from the County Court of Cook County, the Hon. EDMUND
K. JARECKI, Judge, presiding.
MR. JUSTICE BRISTOW DELIVERED THE OPINION OF THE COURT:
Rehearing denied January 21, 1952.
Charles M. Thompson, trustee of Chicago and North Western Railway Company, filed objections in the county court of Cook County to the application by the collector of Cook County for a judgment for nonpayment of taxes for the year 1940 upon certain property of the railroad. At the time of filing said objections the objector complied with the law requiring payment of at least 75 per cent of the tax assessed. A number of objections were made which are not necessary for consideration here, because the case was decided upon the following objection:
"The Objector further objects to the assessment and tax for the reason that said assessment was improperly made by the local assessor of Cook County without authority of law and was void; that the property involved herein is operating property of the objecting Chicago and North Western Railway Company and is a structure and improvement of the Railway Company on its right-of-way and is connected with and used in the operation of the railroad and not legally assessable by the assessor of Cook County."
The court sustained the objection and, among others, made the following finding: "5. That the said property was operating property of the Objector, that is, property used in the operation of its railroad; that the revenue from the operation of said property was included in the report of the Objector to the State Tax Commission as a part of its gross railway revenue for the year 1940; that said property was not subject to assessment by the local Assessor and that said assessment and the tax produced thereby is illegal and void." The collector appeals from said judgment directly to this court because the revenue is involved.
The Chicago and North Western Railway Company, successor to Charles M. Thompson, trustee, will hereafter be referred to as the "railroad" and the appellant as the "collector" or "appellant."
The railroad in 1931 constructed, on real estate owned by it in the city of Chicago, a building and facilities for the use of Railway Express Agency, Inc. The express company is wholly owned by 86 Class 1 railroads, including the appellant. The express company pays appellant $192,000 a year to cover rent, insurance and taxes in monthly installments. Title to the building is in the railroad. The railroad included the property used by the express company in its annual return to the Illinois Tax Commission as railroad operating property. The Tax Commission reclassified the express building and certified it to the assessor of Cook County as noncarrier real estate, and thereupon the assessor, in compliance with the statute, assessed the same, whereby it became liable to pay taxes at the rate and in the amount levied by the several taxing bodies in Cook County entitled to collect taxes on the premises at that location. It is stipulated between the parties that the Illinois Tax Commission certified the property involved herein as assessable by the local assessor for the year 1940 as nonoperating property. It also is stipulated that the collector made a prima facie case for judgment in the county court.
The issue in the case is whether the taxes upon the building in controversy should have been levied upon an assessment of its value made by the local assessor or upon an assessed value made by the Tax Commission.
The materiality of this issue lies in the fact that, under the existing statute, if the property was operating railroad property it must be assessed by the Tax Commission, which assessment must be based upon the average of values of railroad property throughout the State, (Mobile and Ohio Railway Co. v. Tax Commission, 374 Ill. 75,) and presumably less than local assessed value; and upon the further fact that if the property was operating railroad property, it was beyond the power of the local assessor for assessment purposes. Thus, a legal question is presented whether the classification of a specified property belonging to a railroad as operating or nonoperating property is determined by the Tax Commission or may it be determined by a court upon a tax objection hearing, as a question of fact. Ancillary to this is the further question whether a court, upon hearing tax objections, has the power to overrule the classification made by the Tax Commission or must such classification remain in effect until overruled by a direct proceeding brought to question its validity.
The whole question of the assessment of railroad property for taxing purposes is regulated by statute. The following sections of the Revenue Act of 1939 are pertinent.
Section 17 (Ill. Rev. Stat. 1939, chap. 120, par. 498,) provides, "The Tax Commission shall assess all property owned or used by railroad companies operating within this State except noncarrier real estate. * * * The township assessor, county assessor, supervisors of assessments, board of assessors, board of review or board of appeals, as the case may be, shall assess all other property not exempted from taxation."
Section 20 (par. 501,) lays down the rules to be followed in the valuation of railroad property.
Section 79 (par. 560,) subparagraphs (2) and (4), are as follows: "(2) The term `operating property' shall mean and include all tracks and right of way, all structures and improvements on such right of way, all rights and franchises, all rolling stock and car equipment, and all other property, real or personal, tangible or intangible connected with or used in the operation of the railroad including real estate contiguous to railroad right of way or station grounds held for a reasonable expansion or future development." "(4) The term `non-carrier real estate' shall mean and include all land, and improvements on such land, not situated on the right of way of said railroad and not used as operating property within the meaning of the definition set out above in paragraph (2). Improvements owned by others and situated on the right of way not used in the operations of said railroad shall be deemed to be `non-carrier real estate.' The Tax Commission shall adopt such rules and regulations as shall be proper to determine whether any property is `non-carrier real estate'."
Section 83 (par. 564) provides: "Every railroad company subject to assessment in this State shall annually return to the Tax Commission a list of its non-carrier real estate in this State, indicating the description thereof, the current assessed value and the estimated true value of all non-carrier real estate both within and without this State, and any other information the Tax Commission may require. The Tax Commission shall examine said list and make whatever additions or alterations it may find necessary and transmit to the proper assessing officials of each county in which non-carrier real estate may be located, the list above described, together with any other information it may deem pertinent. The proper assessing officials of each county shall thereupon assess such non-carrier real estate in the same manner as other property belonging to individuals, except that it shall be treated as property ...