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Lutheran Church of the Good Shepherd of Bourbonnais v. Department of Revenue of the State of Illinois

October 13, 2000


Appeal from the Circuit Court of the 21st Judicial Circuit, Kankakee County, Illinois, No. 99-MR-46 Honorable Fred S. Carr, Jr., Judge, Presiding.

The opinion of the court was delivered by: Presiding Justice Slater

The plaintiff, Lutheran Church of the Good Shepherd of Bourbonnais (the Church), filed a complaint in the circuit court of Kankakee County for administrative review of a decision by the Department of Revenue of the State of Illinois (the Department). The Department denied a real estate tax exemption for two tracts of land owned by the Church. The circuit court initially reversed the Department's decision and granted the tax exemption. However, following a motion for reconsideration, the circuit court affirmed the Department. Plaintiff now appeals, and we reverse.


On July 24, 1997, the Church filed an application for a property tax exemption for the year 1997 for two parcels of land totaling 3.347 acres (the subject property). The subject property is adjacent to other Church land containing a worship facility, a parking lot and a 20 foot strip of grass. When the subject property was acquired by the Church in 1996, crops were growing on the land. According to Paul Schultz, the chairman of the board of church properties, the Church did not plant crops on the land in 1997 because it intended to use the property as a extension of the existing yard area. The yard was to be used as a playground or picnic area or for other recreational activities. After the crops were harvested in late 1996, nothing was done to the subject property until August of 1997 when weeds that had overgrown the property were mowed. In November the property was tilled in preparation for planting grass seed, but no seeding took place due to unfavorable weather conditions.

Although the Kankakee County Board of Review recommended approval of the Church's tax exemption application, the Department denied the application on the basis that the property was "not in exempt use." The Church requested a formal hearing, which was held on April 17, 1998. Paul Schultz was the only witness, and he testified as indicated above. The administrative law judge subsequently recommended denial of the exemption and the director of the Department accepted that recommendation on January 27, 1999. The Church filed its complaint for administrative review in the circuit court on March 4, 1999. As previously indicated, after initially reversing the Department's decision, the court reconsidered its ruling and affirmed the Department's denial of the tax exemption.


The threshold issue in this case concerns the proper standard of review to be applied by this court to the Department's decision. See Richard's Tire Co. v. Zehnder, 295 Ill. App. 3d 48, 692 N.E.2d 360 (1998) (noting that appellate court is to review the administrative decision, not the trial court's determination). The Church asserts that where, as here, the facts are undisputed, the issue of whether property is tax exempt is a question of law subject to de novo review. This view is consistent with that expressed by our supreme court in several cases. See Chicago Patrolmen's Ass'n v. Department of Revenue, 171 Ill. 2d 263, 664 N.E.2d 52 (1996) (where facts are undisputed, determination of whether property is exempt from taxation is question of law); City of Chicago v. Illinois Department of Revenue, 147 Ill. 2d 484, 590 N.E.2d 478 (1992) (same); Harrisburg-Raleigh Airport Authority v. Department of Revenue, 126 Ill. 2d 326, 533 N.E.2d 1072 (1989) (same). The Department, on the other hand, contends that the issue is a mixed question of fact and law and, pursuant to City of Belvidere v. Illinois State Labor Relations Board, 181 Ill. 2d 191, 692 N.E.2d 295 (1998), a "clearly erroneous" standard is appropriate. In Belvidere the court held that the issue of whether the city of Belvidere's decision to contract out for paramedic services affected wages, hours and other conditions of city firefighter's employment was a mixed question of fact and law.

Since Belvidere, decisions from various districts and divisions of this court, when reviewing cases involving tax exemptions, have applied either a de novo standard (see, e.g., First Presbyterian Church v. Zehnder, 306 Ill. App. 3d 1114, 715 N.E.2d 1209 (2d Dist. 1999); Midwest Physician Group, Ltd. v. Department of Revenue, 304 Ill. App. 3d 939, 711 N.E.2d 381 (1st Dist., 3d div. 1999); Mount Calvary Baptist Church, Inc. v. Zehnder, 302 Ill. App. 3d 661, 706 N.E.2d 1008 (1st Dist., 5th div. 1998); Alivio Medical Center v. Illinois Department of Revenue, 299 Ill. App. 3d 647, 702 N.E.2d 189 (1st Dist., 4th div. 1998); Northwest Suburban Fellowship, Inc. v. Department of Revenue, 298 Ill. App. 3d 880, 700 N.E.2d 102 (1st Dist., 6th div. 1998)), or a clearly erroneous standard (see Randolph Street Gallery v. Zehnder, ___ Ill. App. 3d ___, 735 N.E.2d 100 (1st Dist., 3d div. 2000); Friends of Israel Defense Forces v. Department of Revenue, 315 Ill. App. 3d 298, 733 N.E.2d 789 (1st Dist., 5th div. 2000) Metropolitan Water Reclamation District v. Department of Revenue, 313 Ill. App. 3d 469, 729 N.E.2d 924 (1st Dist., 3d div. 2000); XL Disposal Corp. v. Zehnder, 304 Ill. App. 3d 202, 709 N.E.2d 293 (4th Dist. 1999)).

"The selection of a proper standard of review is of far more than mere academic interest. This decision largely determines which court will have the final word on a particular issue. If we believe that an issue is fact-specific, we will usually trust the trial court as fact-finder to render the proper decision; thus, we will select a deferential, 'clearly erroneous' standard.

If, however, we believe that an issue needs to be decided uniformly throughout a jurisdiction's courts, we should opt for de novo review. As Judge Richard Posner has noted, a court should select de novo review if it desires to establish 'rules that will assure that cases with the same facts are decided the same way by different judges.' The choice between these two approaches is a crucial policy decision ***." T. O'Neill and S. Brody, Taking Standards of Appellate Review Seriously: A Proposal to Amend Rule 341, 83 Ill. B.J. 512, 516-17 (1995), quoting Johnson v. Trigg, 28 F. 3d 639, 645 (7th Cir. 1994).

In this case we believe that the clearly erroneous standard of review is appropriate, for three reasons. First, to qualify for a tax exemption the Church must show that the subject property is "used exclusively for religious purposes." 35 ILCS 200/15--40 (West 1996). Property satisfies the exclusive-use requirement if it is primarily used for the exempted purpose. McKenzie v. Johnson, 98 Ill. 2d 87, 456 N.E.2d 73 (1983). Thus, "[w]hether a particular [property] may be entitled to exemption turns on the evidence showing how the [property] is being used." McKenzie, 98 Ill. 2d at 100, 456 N.E.2d at 79. Given the necessarily fact-based nature of this inquiry, we do not believe de novo review would be proper.

Second, Belvidere held that the clearly erroneous standard should be applied to mixed questions of fact of law, which it referred to as "involv[ing] an examination of the legal effect of a given set of facts." Belvidere, 181 Ill. 2d at 205, 692 N.E.2d at 302. Such mixed questions have also been described as "questions in which the historical facts are admitted or established, the rule of law is undisputed, and the issue is whether the facts satisfy the statutory standard." Pullman-Standard v. Swint, 456 U.S. 273, 289 n.19, 72 L. Ed. 2d 66, 80 n.19, 102 S. Ct. 1781, ___ n.19 (1982). This case appears to fall squarely within that definition, since it requires determining whether the uncontested facts satisfy the statutory exclusive-use requirement.

Third, the clearly erroneous standard grants a degree of deference to the Department that is not present in de novo review. This deference acknowledges the Department's expertise and credits its experience in such matters. See Abrahamson v. Illinois Department of Professional Regulation, 153 Ill. 2d 76, 606 N.E.2d 1111 (1992) (courts give substantial weight and deference to agencies' statutory interpretations based on their experience and expertise).

For these reasons, we will not disturb the Department's ruling unless it is clearly erroneous, a standard of review that lies between a manifest weight of the evidence standard and de novo review. Belvidere, 181 Ill. 2d 191, 692 N.E.2d 295. Under that standard, we must accept the Department's decision unless we are left with the definite and firm conviction that a mistake has been committed. Friends of Israel, 315 Ill. App. 3d 298, 733 ...

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