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Community Renewal Soc'y v. Dep't of Labor

OPINION FILED AUGUST 20, 1982.

COMMUNITY RENEWAL SOCIETY, PLAINTIFF-APPELLANT,

v.

THE DEPARTMENT OF LABOR ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County; the Hon. Arthur L. Dunne, Judge, presiding.

JUSTICE LORENZ DELIVERED THE OPINION OF THE COURT:

Community Renewal Society, a not-for-profit corporation, appeals from a judgment which affirmed the Director of the Department of Labor's decision that the Society is not exempt from the requirements of the Unemployment Insurance Act (UIA) (Ill. Rev. Stat. 1979, ch. 48, par. 300 et seq.).

The dispositive issue is whether the Director correctly interpreted section 211.3(A) (2) of the Act (Ill. Rev. Stat. 1979, ch. 48, par. 321.3(A) (2)). This section grants an exemption from participation in the unemployment insurance program for any organization "which is operated primarily for religious purposes and which is operated, supervised, controlled or principally supported by a church or convention or association of churches."

In rejecting the Society's claim that it qualified for this exemption, the Director concluded that (a) public worship and religious instruction are the only activities which can qualify as "religious" under the Act; and (b) the exemption only applies to organizations which "by law and in fact" are operated, controlled, or supervised by churches or groups of churches: in other words, the legal right to control, supervise, or operate the organization under its charter or bylaws is as important as the actual exercise of these powers.

We conclude that the Director incorrectly interpreted the statute, and we accordingly reverse his decision and remand for further proceedings. The following facts are material to our decision.

The Society was founded in 1893 as the Chicago City Missionary Society by members of the United Church of Christ. Among its chief activities at present are programs to develop new congregations and maintain existing congregations as members of the United Church of Christ. Other projects include maintaining a conference facility in Woodstock, Illinois, plus programs to combat racism and fund various community organizations.

The Society is run by a board of directors, and the Society's "constitution" requires that a majority of the directors must be members of the United Church of Christ. The directors are elected by two classes of voters: (1) "participating members," consisting of individuals who financially support the Society, and (2) "church representatives" who serve as the delegates of congregations which have helped support the Society and which belong to the Chicago Metropolitan Association of the United Church of Christ.

According to the report of the Department of Labor's hearing officer, a report which the Director affirmed and incorporated in his decision, "During the periods at issue the number of `church representatives' exceeded the number of votes of the `participating members' at a ratio of approximately five to three." This estimate of the size of the majority maintained by the church representatives was admittedly conservative, however, because a number of church representatives also chose to make individual contributions to the Society and, accordingly, they were counted as participating members as well as representatives of their congregations.

The Society's "constitution" and bylaws provide that the Association Minister of the Chicago Metropolitan Association, the church group's chief officer, is automatically a member of the Society's board of directors. Moreover, these documents also provide that half the members of the Society's nominating committee are to be chosen by the Chicago Metropolitan Association. And, the report adopted by the Director states that "[t]hroughout its operation no person has been elected to the [Society's] Board of Directors who has not first been selected by the nominating committee."

In addition, the Society's bylaws provide that the board of directors must consult with the Chicago Association and the Illinois Conference of the United Church of Christ when selecting the Society's executive director. And, still further, the Society has entered into covenants with the Chicago Association and the Illinois Conference in which it agreed to undertake various church-related projects on behalf of the church groups.

Relying on People ex rel. Carson v. Muldoon (1922), 306 Ill. 234, 137 N.E. 863, and People ex rel. McCullough v. Deutsche Evangelisch Lutherische Jehovah Gemeinde Ungeaenderter Augsburgischer Confession ("Deutsche Gemeinde") (1911), 249 Ill. 132, 94 N.E. 162, the Director concluded that "[t]he Illinois Supreme Court defined religious purpose `as a use of such property by a religious society or body of persons as a stated place for public worship, Sunday schools, and religious instruction.'" Applying this statement as a definition, the Director ruled that the Society was not operated primarily for religious purposes because neither public worship nor religious instruction were its primary activities.

The Director also ruled that the Society was not operated, supervised, or controlled by a church or group of churches, on the grounds that the Society "was subordinate in fact to its own members and not to the Chicago Metropolitan Association of the United Church of Christ, even though a majority of the [Society's] members may also have been members of the Association of Churches." This ruling was based on the conclusion that "the legislature intended to exempt only those primarily religious organizations which are by law and in fact" operated, supervised, or controlled by a church or group of churches. (Emphasis added.) Thus the Director concluded that the Society did not qualify for the exemption even if, as a practical matter, it was controlled, supervised, or operated by the Chicago area association of United Church of Christ congregations.

I. Unemployment Insurance

During the Great Depression, Congress induced State legislatures to create unemployment insurance programs by (1) imposing a Federal excise tax on certain classes of employers; and (2) giving the employers a credit against the tax for contributions made to federally-approved State unemployment insurance programs. St. Martin Evangelical Lutheran Church v. South Dakota (1981), 451 U.S. 772, 775, 68 L.Ed.2d 612, 615-16, 101 S.Ct. 2142, 2145; California v. Grace Brethren Church (1982), 457 U.S. 393, ...


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