SUPREME COURT OF ILLINOIS
507 N.E.2d 858, 116 Ill. 2d 311, 107 Ill. Dec. 705 1987.IL.513
Appeal from the Circuit Court of Cook County, the Hon. Earl Arkiss, Judge, presiding.
CHIEF JUSTICE CLARK delivered the opinion of the court.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE CLARK
The two causes consolidated in this appeal challenge the constitutionality of the Chicago vehicle fuel tax and the 1% city use tax as applied to aviation fuel. The Chicago Sales Tax Ordinance, effective since August 1, 1981, imposes a 1% use tax on the retail sales price of tangible personal property purchased at retail within the city of Chicago and on the use within the city of tangible personal property purchased at retail outside the city. As originally passed, the 1% city use tax provided an exemption for the use of jet fuel purchased at retail outside Illinois and delivered into the city by pipeline. An exemption was not, however, provided for the retail purchase of jet fuel within Illinois. On December 23, 1985, the city enacted an ordinance, effective January 1, 1986, repealing the exemption for jet fuel purchased at retail outside Illinois.
The city enacted the Chicago Vehicle Fuel Tax Ordinance on September 24, 1986, as part of a comprehensive revenue package that the city states was conceived to address an $80 million revenue shortfall resulting from the city's repeal of the Chicago commercial lease tax. The ordinance, which became effective October 6, 1986, imposes a tax of five cents per gallon on vehicle fuel purchased at retail within the city and purchased at retail outside the city, but used in the city. "Vehicle fuel" includes all fuel used to propel cars, trucks, buses, trains, motorcycles, boats, airplanes, and helicopters. The ordinance provides further that the city property tax levy for 1986 shall be abated by the amount of revenue realized from the vehicle fuel tax in 1986.
On October 2, 1986, United Airlines, American Airlines, Northwest Airlines, Trans World Airlines, and US AIR (the O'Hare plaintiffs) filed suit in the circuit court of Cook County for declaratory and injunctive relief against the city of Chicago and certain of its officials. The complaint alleged that the vehicle fuel tax and the 1% city use tax breach and unconstitutionally impair the Chicago-O'Hare International Airport Use Agreement and Terminal Facilities Lease (the O'Hare Use Agreement), a contract in effect between the city and the O'Hare plaintiffs governing the airlines' use of the airport. The complaint also alleged that the challenged taxes place an impermissible burden on interstate commerce, are unconstitutional occupation taxes, and that the vehicle fuel tax violates due process because the enacting ordinance was not passed in accordance with the rules of the Chicago city council.
On October 10, 1986, Midway Airlines, Inc. (Midway), the major tenant of Midway Airport under a use agreement and terminal facilities lease with the city (the Midway Use Agreement), filed a virtually identical suit in the circuit court of Cook County. The suit was consolidated with the action filed by the O'Hare plaintiffs and with two other actions brought by nonairlines gasoline distributor groups who, though not now before this court, also challenged the validity of the vehicle fuel tax (Illinois Gasoline Dealers Association v. City of Chicago and Midwest Petroleum Marketers Association v. City of Chicago, Nos. 64427, 64458 cons.). The parties in all four suits filed cross-motions for summary judgment. Because of the great similarity in the language used to spell out the pertinent rights and obligations in the separate O'Hare and Midway use agreements, Midway did not file a memorandum or tender oral argument at the hearing held on the parties' summary judgment motions, choosing instead to rely on the memorandum and oral argument of the O'Hare plaintiffs.
In a consolidated opinion, the circuit court granted summary judgment for the city with respect to the claims made by the nonairline gas-distributor groups. The circuit court also granted the city's motion for summary judgment on the O'Hare plaintiffs' and Midway's (hereinafter jointly referred to as the airlines) claim that the vehicle fuel tax violated due process, but granted summary judgment for the airlines on the ground that the challenged taxes, as applied to aviation fuel, unconstitutionally impair the use agreements. In light of its ruling, the circuit court did not reach the airlines' commerce clause or occupation tax claims. The city filed direct appeals to this court from the circuit court's ruling denying the city summary judgment on the airlines' impairment-of-contract claim. The airlines do not appeal from the circuit court's ruling denying their summary judgment motion on the due process claim. We allowed the city's appeals (103 Ill. 2d R. 302(b)), consolidated the two airline causes, and ordered the matter expedited.
During the course of this litigation, the parties have focused almost exclusively on the terms of the O'Hare Use Agreement. The present agreement, executed in 1985, amends and restates the 1983 O'Hare Use Agreement, which superseded the original 1959 use agreement. The agreement, a lengthy single-spaced document covering over 150 pages of the record, grants the airline signatories the right to conduct an airline-transportation business at O'Hare and to perform there all necessary and incidental operations and functions through May 11, 2018. In exchange for this right, the airline signatories agree to pay the city all rentals, fees, and charges sufficient to cover the net cost of operating, developing, and maintaining O'Hare as well as the net cost of financing improvements. The use agreement segregates the airport into six cost-revenue centers so that rentals, fees, and charges due are allocated among the airlines according to their respective usage of the airport. Under the terms of the agreement, the city utilizes seven different airport funds to account for the monies it collects from the airline signatories. The city maintains these funds entirely separate and apart from the city general corporate fund.
The 1985 Midway Use Agreement in effect between the city and Midway expires in 1992. In exchange for the right to conduct an airline-transportation business at Midway airport, the agreement requires Midway to pay rents, charges, and fees calculated in a manner to ensure that Midway and the other airlines using the airport are responsible for the entire cost of operating the airport. The city accounts for the monies it collects for the operation of Midway airport through three different funds created by the use agreement, each of which is maintained separate and apart from the city general corporate fund. Although Midway did not file a memorandum below in support of its summary judgment motion, Midway has favored this court with a short brief which is limited to addressing factual points unique to it. In light of the substantial similarity between the O'Hare and Midway use agreements for the purposes of our review, Midway states that it has adopted the arguments made in the brief filed by the O'Hare plaintiffs. We now turn to those arguments, noting where appropriate any relevant difference in the two use agreements.
Both the vehicle fuel tax and the 1% city use tax are general municipal revenue taxes applicable to all users of all types of vehicle fuel used within the corporate boundaries of the city. The city argued in the circuit court that the O'Hare Use Agreement does not prohibit the challenged taxes, which, by their very nature as general taxes, fall in an equal fashion on the airlines as well as the general public. The circuit court found, however, and the airlines argue here, that section 3.04(b) of the O'Hare Use Agreement bars the vehicle fuel tax and the 1% city use tax. Section 3.04(b) provides in pertinent part:
"Except as in this Agreement otherwise specifically provided, no charges, fees or tolls of any nature, direct or indirect, shall be imposed by [the] City upon [the airline signatories] for the privilege of purchasing, selling or using for a purpose herein permitted any materials or services purchased or otherwise obtained by [the airline signatories]. The foregoing shall not . . . preclude [the] City from imposing any tax, charge, or permit or license fee not inconsistent with the rights and privileges granted to the [airline signatories] hereunder. Notwithstanding the foregoing, nothing in this Section ...