APPEAL from the Circuit Court of Cook County; the Hon. CHARLES
S. DOUGHERTY, Judge, presiding.
Plaintiff, Methodist Old Peoples Home, an Illinois not-for-profit corporation, filed a complaint in the circuit court of Cook County seeking a declaratory judgment that the Georgian Home, owned by it in Evanston, is exempt from taxation; that liens of 1964 and 1965 real-estate taxes on said property are void, and that defendants be enjoined from collecting taxes for those and subsequent years. The city of Evanston was permitted to intervene and the cause was referred to a master in chancery who found that plaintiff's real estate was not exempt and recommended denial of the relief sought. The trial court entered a decree in accordance with the master's report and dismissed the complaint. Since the revenue is involved plaintiff has appealed directly to this court.
The sole question presented for review is whether or not plaintiff's property is exempt from taxation under our constitution and the applicable statute. Plaintiff bases its claim for exemption on its assertion that the property is used for charitable purposes, more specifically as an old people's home pursuant to the provisions of section 19.7 of the Revenue Act of 1939. Ill. Rev. Stat. 1965, chap. 120, par. 500.7, as amended by H.B. 1328 passed by the 1967 General Assembly.
Plaintiff was incorporated as an Illinois not-for-profit corporation in 1896. It has no capital stock or stockholders, but is comprised of a membership of 200 to 300 individuals, three quarters of whom are required to be members of the Methodist Church. The affairs of the corporation are managed and supervised by a board of 24 managers. Managers are elected for a term of three years, and terms are so staggered that eight or more must be elected or re-elected annually. Management supervisory functions are divided and assigned to committees selected from the board. Among these is an application committee which, according to plaintiff's bylaws, "shall receive, consider, and approve or reject all applications for admission to the home under the provisions of Article 6 of the by-laws and rules established by the board, * * *." Plaintiff's corporate purposes, set forth in its charter as amended are as follows: "To establish and maintain a suitable home or homes and necessary auxiliary institution for old people; to provide proper accommodations and care for the sick and homeless aged; * * * and to receive gifts and execute trusts therefor."
Plaintiff has owned and operated one old peoples home since its corporate inception. In 1962 it acquired the property now in question in the form of a residential hotel located in Evanston, Illinois. After extensive remodeling and alteration it commenced operating the property as a home for the aged under the name of the Georgian Home on January 1, 1964. Persons seeking to reside in the home are required to submit detailed statements as to their health, financial condition and personal history. Admission is by election of the applications committee as previously stated. According to plaintiff's bylaws, "applicants shall be in good mental, emotional and physical health, and free of any communicable disease. They shall be ambulatory and able to see and hear well and take care of their personal needs." Furthermore, "no person shall be admitted who is senile, afflicted with insanity, epilepsy or other disease which, in the judgment of the medical staff and the superintendent, are detrimental to the interest of the home or homes."
Upon being accepted, the prospective resident must execute a written form agreement obligating him to pay a so-called Founder's Fee and a monthly service charge. Both the Founder's Fee and the service charge are based on the size and location of the quarters to be assigned, corresponding in principle with the type of rate structure one would find in a commercially operated co-operative multiple dwelling property. The Founder's Fee varies from $6,250 to $25,000 and the monthly charge from $175 to $375. According to the contract these monthly charges may be increased to reflect a resident's equitable share of any increased costs of operation. The Founder's Fee is amortized over the life expectancy of the resident and each year's portion is allocated to current operating costs.
The agreement provides a 60-day trial period during which either the resident or the home may terminate the arrangement. If termination is within that period, the Founder's Fee is refunded less any costs incurred by the trial resident. Thereafter any refunding is solely at the discretion of the plaintiff. As of the time of hearing nearly all of plaintiff's funds were provided from Founder's Fees, and no gifts, bequests or donations had been received.
There is nothing in either plaintiff's bylaws or the agreement it makes with the resident, compelling it to continue providing care and shelter for any resident who may become financially unable to meet his monthly charges or who may become unmanageable because of illness. Furthermore, while the bylaws provide for considering applicants who may be unable to meet the usual financial requirements, there is no provision therein binding upon the admissions committee to admit such applicants.
It is to be noted that the general tenor of health and financial requirements set forth in plaintiff's bylaws are at odds with its chartered purpose of providing "proper accommodation and care for the sick and homeless aged."
Plaintiff asserts that its use of the Georgian Home property meets the requirements of section 19.7 of the Revenue Act of 1939 as amended by H.B. 1328 passed by the 1967 General Assembly and is therefore entitled to tax exemption.
Prior to amendment, section 19.7 of the Revenue Act of 1939 (Ill. Rev. Stat. 1965, chap. 120, par. 500.7) included in the enumeration of property which is exempt from taxation the following: "All property of institutions of public charity, all property of beneficent and charitable organizations, whether incorporated in this or any other state of the United States, and all property of old people's homes, when such property is actually and exclusively used for such charitable or beneficent purposes, and not leased or otherwise used with a view to profit; and all free public libraries."
After the trial court's decree, but prior to the submission of briefs in this appeal, the foregoing statute was amended by House Bill 1328, passed by the 1967 General Assembly. That amendment merely added the following language to section 19.7: "The words `old people's homes' as used in this section shall include any old peoples home licensed by the State of Illinois and owned by a not-for-profit corporation or organization and operated not for profit under the auspices of a religious, fraternal, charitable or other nonprofit organization which old peoples home provides housing, meals, laundry and infirmary services to aged persons and which is financed wholly or in part by charges made to its residents or wholly or in part by endowment, gifts or bequests or by a combination of the foregoing. This definition shall be construed declaratory of the existing law and not as a new enactment. No hospital, however, which has been adjudicated by a court of competent jurisdiction to have denied admission to any person because of race, color or creed shall be exempt from taxation." However, that amendment must be construed in the light of section 3 of article IX of the constitution of Illinois, which reads in part as follows: "The property of the state, counties, and other municipal corporations, both real and personal, and such other property as may be used exclusively for 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."
Since the terms of article IX of the constitution subject all property generally to taxation, the courts have strictly construed statutes granting tax exemptions and have insisted that they keep clearly within the boundaries set forth in the constitution. (MacMurray College v. Wright, 38 Ill.2d 272; Kiwanis International v. Lorenz, 23 Ill.2d 141; Rogers Park Post No. 108 v. Brenza, 8 Ill.2d 286.) The burden of proving the right to exemption is upon the party seeking it, and in determining whether property is included within the scope of an exemption, all facts are to be construed and all debatable questions resolved in favor of taxation. (Kiwanis International v. Lorenz, 23 Ill.2d 141; Rotary International v. Paschen, 14 Ill.2d 480.) Plaintiffs must show that its organization and the use of its property came within the provisions of the statute and the constitution.
It is not disputed that plaintiff is a not-for-profit corporation owning an old peoples home duly licensed by the State of Illinois and operating not for profit under the auspices of a religious organization and that it provides facilities and ...