APPEAL from the Circuit Court of Cook County; the Hon. NATHAN
M. COHEN, Judge, presiding.
MR. JUSTICE WILSON DELIVERED THE OPINION OF THE COURT:
Rehearing denied December 6, 1979.
This is an appeal from a judgment of the circuit court of Cook County permanently enjoining defendants, the County of Cook and its tax officials, from collecting a portion of the 1976 real estate taxes and entering a judgment against plaintiff, Dockside Development Corporation (Dockside), for a tax of $30,604.41. The issues on appeal are (1) whether the trial court erred in granting a tax injunction on a portion of the tax assessment; and (2) whether the court erred in fixing a leasehold assessment on a parcel of land, determining the tax thereon and entering judgment against plaintiff. We reverse the judgment as to Parcel B.
Plaintiff is a lessee of real property from the Chicago Regional Port District (District), a municipal corporation. Pursuant to statute, all of the District's property is exempt from taxation, "provided that a tax may be levied upon a lessee of the District by reason of the value of a leasehold estate separate and apart from the fee, or upon such improvements as are constructed and owned by others than the Port District." Ill. Rev. Stat. 1975, ch. 19, par. 154.1, and ch. 120, par. 500.19.
In 1965, plaintiff entered into a lease for three parcels of tax-exempt land referred to as A, B and C. Parcel A is improved; Parcels B and C are vacant. Parcels A and C are not involved in this appeal.
In 1975 (the quadrennial year) the assessment on Parcel B, described as Vol. 296, Permanent Real Estate Index Number 25-26-600-001-8023, was $434,904. On plaintiff's complaint to the board of appeals, the assessment was reduced to $39,096, resulting in a tax of $4,886.56. In 1976, (a nonquadrennial year), the assessor assessed Parcel B in the amount of $434,904, resulting in a tax of $54,190.88.
On October 12, 1977, plaintiff filed a second amendment to its amended complaint which set forth the following: Count II requested a permanent injunction based on the allegation that defendants erroneously included as a part of the real estate on Parcel B, two gantry cranes which were not real estate, but were personal property and were owned by Max Schlossberg Company; count III requested an injunction based on the assessor's failure to follow the statute pertaining to required notice prior to increase on the 1976 taxes; count IV alleged that a permanent injunction should issue because the assessor failed to follow the guidelines set forth in People ex rel. Korzen v. American Airlines, Inc. (1967), 39 Ill.2d 11, 233 N.E.2d 568; count V alleged that there was a 1100% increase in assessed value from 1975 to 1976 and that an injunction should issue; count VI alleged that a permanent injunction should issue because both the leasehold and the improvements were assessed and either the value of the leasehold or the improvements should have been assessed.
At trial, John Schlossberg, president of Dockside and chairman of the board of Max Schlossberg Company (Max) testified that Parcel B was vacant in 1976 and that the two gantry cranes located on the parcel were owned by Max. The cranes were self-propelled, mounted on wheels, and ran on tracks 32 feet apart. They were used for the handling of commodities and for stevedore work on vessels. They were purchased in 1967 and the cost was in excess of $500,000 for the two of them. When they were purchased, a use tax of $26,346.95 was paid to the State of Illinois. Emesco Warehousing, Marine Terminal Corporation (Emesco) was the operator of the facilities leased from the District. The cranes were leased by Max to Emesco. Schlossberg is the president of Emesco and owns the outstanding shares of Emesco. Schlossberg testified that he and members of his family owned the outstanding shares of both Dockside and Max Schlossberg Corporations.
Schlossberg identified a verified complaint, in case No. 72CH 632, in which Max was one of the plaintiffs and the State Director of Revenue and other State tax officials were defendants. The complaint alleged that the cranes involved in the pending case were not personal property but were real property and as such a use tax was not due the State of Illinois. In addition, Schlossberg identified the order entered by Judge Covelli in case No. 72CH 632, entered on April 3, 1972, which held that the cranes were personal property and a use tax was due on them. The court's finding denied relief based on plaintiff's theory that the cranes were real estate. Both the complaint and order were admitted into evidence. The order further held that a use tax was due based on $473,230, the cost of the cranes.
Later in the trial, counsel for plaintiff admitted to the court that personal property taxes on the cranes for 1972, 1973, 1974, 1975 and 1976 had not been paid.
Kenneth L. Kaval, director of appraisal for the Cook County Assessor's office, testified under section 60 of the Civil Practice Act (Ill. Rev. Stat. 1975, ch. 110, par. 60), that Richard Martin, an employee of the Assessor's office, arrived at the 1976 assessed valuation of $434,904 in the following manner:
"He valued the leasehold and the improvements thereon, determined an economic rent; used the Inwood method of capitalization, came up with a market value of $1,872,061. Took 40 percent of that as the assessment ratio and arrived at an assessed value of $434,904." *fn1
Kaval further testified that one of the county assessor's permanent record cards indicated a full assessment of $2,000,000 valuation of the cranes that was depreciated to $1,800,000. This record card was admitted into evidence. He also testified to the method of computing the assessed valuations for tax years 1974 and 1975.
Paul Sally, professor of mathematics at the University of Chicago, testified that he computed the value of the leasehold of Parcel B for 1975 by applying the formula set forth in the American Airlines Case (People ex rel. Korzen v. American Airlines, Inc. (1967), 39 Ill.2d 11, 233 N.E.2d 568). He computed the "market rental" of the lease by using the "current contract rent" stated in the lease. He also used the same procedure in computing the "fair cash value" of the lease for 1976. On ...