{ "id": 3046165, "name": "CENTRAL ILLINOIS LIGHT COMPANY, Petitioner, v. J. THOMAS JOHNSON, Director of Revenue, et al., Respondents", "name_abbreviation": "Central Illinois Light Co. v. Johnson", "decision_date": "1981-03-18", "docket_number": "No. 53566", "first_page": "275", "last_page": "283", "citations": [ { "type": "official", "cite": "84 Ill. 2d 275" } ], "court": { "name_abbreviation": "Ill.", "id": 8772, "name": "Illinois Supreme Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "36 Ill. 2d 209", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5377810 ], "pin_cites": [ { "page": "211" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/36/0209-01" ] }, { "cite": "41 Ill. 2d 302", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2852430 ], "year": 1966, "pin_cites": [ { "page": "304" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/41/0302-01" ] }, { "cite": "56 Ill. 2d 101", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5403894 ], "year": 1968, "pin_cites": [ { "page": "104-05" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/56/0101-01" ] }, { "cite": "57 Ill. 2d 318", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5406480 ], "year": 1973, "pin_cites": [ { "page": "323" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/57/0318-01" ] }, { "cite": "75 Ill. 2d 308", "category": "reporters:state", "reporter": "Ill. 2d", "opinion_index": 0 } ], "analysis": { "cardinality": 711, "char_count": 15337, "ocr_confidence": 0.864, "pagerank": { "raw": 1.7587152307899852e-07, "percentile": 0.709653535785291 }, "sha256": "0262cf2aed0d84339faafa80298be4492d22eb6e81f717405d7965a58bd782ab", "simhash": "1:2a870c8c212a4751", "word_count": 2468 }, "last_updated": "2023-07-14T21:33:35.582574+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "CENTRAL ILLINOIS LIGHT COMPANY, Petitioner, v. J. THOMAS JOHNSON, Director of Revenue, et al., Respondents." ], "opinions": [ { "text": "MR. JUSTICE WARD\ndelivered the opinion of the court:\nIn February of 1980, the Department of Revenue and the supervisor of assessments of Fulton County reclassified as real property certain machinery and equipment of the Central Illinois Light Company (CILCO) that had been previously assessed for purposes of taxation as personalty by both of the governmental bodies.\nIn response, CILCO filed a motion in this court for leave to file an original action \u201crelating to revenue\u201d under Supreme Court Rule 381 (73 Ill. 2d R. 381), in which it petitioned for declaratory and injunctive relief. We granted the motion for leave to file the action.\nThe petitioner is a privately owned public utility engaged in producing, transmitting and distributing electrical energy. Duck Creek Station, a steam electrical generating facility located in Fulton County, is one of several plants owned and operated by CILCO. Duck Creek Station began operations in 1974. For that year and for succeeding years, CILCO filed certain schedules with the Department of Local Government Affairs on the basis of which that department classified and assessed the utility\u2019s pollution-control equipment as personal property. The assessments were then forwarded to the Fulton County supervisor of assessments and used as a basis for the county\u2019s classifying, assessing, and taxing of property at Duck Creek Station, that was subject to ad valorem personal and real property taxes.\nThe statutory quadrennial assessment of property in Fulton County was scheduled for 1975, and in anticipation of it CILCO and the county\u2019s supervisor of assessments, Vernon Thompson, agreed that the following formula would be applied in assessing CILCO\u2019s property at its Duck Creek Station: 60% of the property would, for purposes of taxation, be considered to be personal property and 40% would be considered to be real property and so assessed, based on 25% of the actual book cost of all the property located at the Duck Creek Station. The agreement, however, did not identify each item of property listed on property schedules as being real or personal. The personal property taxes imposed on the Duck Creek Station property were based upon the valuations assigned by CILCO to its machinery and equipment. A letter directed by CILCO to Fulton County officials confirming this assessment arrangement included the statement: \u201cThis classification will be subject to review and possible adjustment when the effect of the abolition of personal property taxation on or before January 1, 1979 on the amount of property or replacement taxes paid by CILCO to Fulton County is known.\u201d\nThe Fulton County taxing officials followed the 60%/40% assessment formula for the years 1975 through 1978. As stated, the assessments for the personal property taxes were based upon CILCO\u2019s declared value of its machinery and equipment at Duck Creek, which were itemized in personal property schedules and filed with the county.\nAfter the abolition of the ad valorem tax on personal property (see Client Follow-Up Co. v. Hynes (1979), 75 Ill. 2d 308), Fulton County, in preparation for the 1979 quadrennial assessment, for the first time conducted an on-site inspection at Duck Creek for the purpose of determining the value of the real and personal property at the facility. The Real Estate Analysis Corporation, which had been retained by the county to conduct the inspection, gave an appraisal of $206,939,000. Machinery and equipment accounted for approximately $120 million of the valuation, and the structural improvements, reservoirs, and dams were appraised at $86.4 million.\nOn February 8, 1980, after the abolition of the personal property tax, the Fulton County board of review reclassified all of the property at Duck Creek as realty, including CILCO\u2019s machinery and equipment which had previously been assessed and taxed as personal property. This action came after the Department of Revenue had acted to reclassify CILCO\u2019s pollution-control equipment at Duck Creek as real property for the purpose of taxation. As a result of Fulton County\u2019s reclassification it was calculated that the county would derive an additional $1.7 million from the real property tax imposed on CILCO\u2019s machinery and equipment at the Duck Creek Station.\nTo support this reclassification, the respondents point to the Illinois Property Tax Manual, which was prepared by the Department of Revenue in 1980 as \u201ca guide to all local officials that are involved in administering the Illinois Property Tax System.\u201d It was published in compliance with statutory directions to the Department to \u201c[p] rescribe general rules and regulations, not inconsistent with law, for local assessment officers relative to the assessment of property for taxation, which general rules and regulations shall be binding upon all local assessment officers and shall be obeyed by them respectively until reversed, annulled or modified by a court of competent jurisdiction.\u201d Ill. Rev. Stat. 1979, ch. 120, par. 611(3).\nThe manual declares that the determination of whether property is to be classified as real or personal is a \u201cmatter of law.\u201d It states, too:\n\u201cIf the Revenue Act, as it existed on January 1, 1979, specified that a certain kind of property shall be considered personal property for purposes of taxation then the assessor must rely on that specification. Property that has been statutorily classified as personalty as of January 1, 1979, cannot be reclassified as real estate. In those cases where no rule is provided by statute, the determination of whether a particular property shall be considered real or personal shall be made from a consideration of the distinguishing characteristics of real and personal property.\u201d\nThe petitioner acknowledges that there is no provision in the Revenue Act of 1939 (Ill. Rev. Stat. 1979, ch. 120, par. 482 et seq.) which specifies or requires that \u201cmachinery and equipment\u201d be considered to be personalty. The manual does set out various characteristics as a guide to what is to be considered \u201creal estate.\u201d One of those provisions, and one upon which the Department of Revenue and Fulton County relied in reclassifying CILCO\u2019s machinery and equipment at Duck Creek Station as real property, is the following:\n\u201cIf machinery is intended for permanent use in carrying on the business for which the building was erected or is used, it becomes part of the realty on being installed and it is immaterial that the machines may be removed without injury to the building. This rule has special application to heavy machinery intended for the building and not intended to be moved from place to place, though resting in position by its own weight, and to machinery which is part of a factory or shop and indispensable thereto, though not actually fastened.\u201d\nIf this guide or rule is to be applied uniformly across the State, the parties say \u201cvirtually all property classified as machinery and equipment for personal property tax purposes and owned by public utilities and others in 1970 and 1978 will be subject to ad valorem taxes as real property in 1979 and later years.\u201d\nCILCO contends that the rule referred to in the manual is not applicable because under the terms of section 18.1 of the Replacement Tax Act (Ill. Rev. Stat. 1979, ch. 120, par. 499.1) reclassification of the machinery and equipment at the Duck Creek Station as real property is prohibited. That portion of section 18.1 which is relevant here provides:\n\u201cNo property lawfully assessed and taxed as personal property under this Act prior to January 1, 1979, shall be classified as real property subject to assessment and taxation under this Act after January 1, 1979. No property lawfully assessed and taxed as real property under this Act prior to January 1, 1979, shall be classified as personal property subject to assessment and taxation after January 1, 1979.\u201d (Ill. Rev. Stat. 1979, ch. 120, par. 499.1.)\nThe petitioner declares that its machinery and equipment at Duck Creek were \u201clawfully assessed and taxed\u201d as personal property prior to January 1, 1979, and that reclassification is prohibited, unless the original classification was fraudulent.\nFulton County contends that the agreement with CILCO under which the petitioner\u2019s property at Duck Creek was assessed as being 60% personal property and 40% real property, while not fraudulent, was unlawful within the meaning of section 18.1. The county claims that this ratio of assessment was improper because it was applied to only 25% of the book value of the property at Duck Creek rather than 33 1/3%, which it says was required by statute (Ill. Rev. Stat. 1979, ch. 120, par. 501(1)).\nThe Department of Revenue, which in 1979 initially reclassified CILCO\u2019s machinery and equipment as realty, acknowledges that it erred in doing so. The Department now agrees with CILCO that, under section 18.1 of the Replacement Tax Act, the petitioner\u2019s machinery and equipment at Duck Creek were lawfully assessed and taxed as personal property prior to January 1, 1979, and therefore could not now be reclassified as realty. The Department declares, however, that any new machinery or equipment or other property acquired after January 1, 1979, and which falls under the statutory or common law definition of real property will be subject to the ad valorem tax on real property. Similarly, the Department states that any new utility construction completed after January 1, 1979, should be considered as real property, assuming of course that the property falls within the legal definition of real property. These contentions are disputed by the petitioner. It says, inter alia, that such action by the Department or the county would be illegal as converting the Replacement Tax Act into a \u201cprohibited revenue generating measure.\u201d These contentions and countercontentions are, however, for another day. There has not been an attempt to reclassify by the Department or county any property acquired or constructed by CILCO subsequent to January 1, 1979. As a result, there is no existing controversy, and we will not consider contentions beyond the issue of this case.\nThe legislative background to the Replacement Tax Act shows an awareness by the legislature of agreements which existed between certain utilities and local taxing officials regarding the classification of property as personal or real and reveals the legislative reasoning underlying section 18.1. Illustrating, in response to a question by Senator Adeline Geo-Karis as to whether section 18.1 would place any restrictions upon county assessors with respect to the classification of property as real or personal, Senator Terry Bruce responded:\n\u201cYes, it has, Senator Geo-Karis ***. [G]oncem was expressed by many in the House and an amendment was added which clarifies *** that property that was legally classified in prior years cannot be reclassified, and frankly that works both ways. Some assessors would give utilities a break if it were assessed as real property as opposed to personal property, some would give the break if it were personal rather than real. And now some utility companies seeing that they would not have to pay any taxes if they could get it reclassified quickly to personal property and not as real property, wouldn\u2019t pay. The decision was made that the best thing is to freeze everybody with the deals that they\u2019ve made with their local assessor. If they went to them and said, look, let\u2019s assess this as personal property so I can get a lower rate, that\u2019s fine, they\u2019re stuck with that and now they\u2019re off the rolls. If they went through in the other way and said, let\u2019s classify it as real estate and they enjoyed that advantage for several years at a lower rate than the personal property tax rate, I don\u2019t think it would be fair now to allow them to change that. So the bill just says, if it were legally classified prior to the enactment of this bill, it cannot be reclassified.\u201d\nIt is clear it was the legislature\u2019s intent through section 18.1 to \u201cfreeze\u201d classifications of property that had been made by assessing officials pursuant to agreements such as that involved here.\nThis court has consistently held that the assessment of property is not a judicial function but a legislative one, the propriety of which courts will not review absent charges that the assessment was a product of fraud. (See La Salle National Bank v. County of Cook (1974), 57 Ill. 2d 318, 323; Clarendon Associates v. Korzen (1973), 56 Ill. 2d 101, 104-05; People ex rel. Joseph v. Schoenborn (1968), 41 Ill. 2d 302, 304; People ex rel. Frantz v. M.D.B.K.W., Inc. (1966), 36 Ill. 2d 209, 211.) None of the parties contend that fraud was involved in the agreement in 1974 as to the classification and valuation of CILCO\u2019s Duck Creek Station. We, accordingly, hold that property of CILCO at the Duck Creek Station, which was classified and taxed as personalty prior to January 1, 1979, may not, under the Replacement Tax Act, now be reclassified as real property for purposes of taxation. (Ill. Rev. Stat. 1979, ch. 120, par. 499.1.) If there was in fact a variance from the terms of the statute in the assessment, as Fulton County states, we do not consider it would affect this holding. The property was assessed and taxed as personal property. This was the fundamental consideration, and under section 18.1 the property cannot now be reclassified. We would add, parenthetically, that it was Fulton County itself that made the 25% assessment and that this assessment was made not only in CILCO\u2019s case but apparently generally throughout the county.\nFor the reasons given, the respondents are permanently enjoined from reclassifying the property involved as real property for purposes of taxation.\nInjunction entered.\nMR. JUSTICE SIMON took no part in the consideration or decision of this case.", "type": "majority", "author": "MR. JUSTICE WARD" } ], "attorneys": [ "Terry F. Moritz, Vicki A. Thompson, and Richard A. Angell, of Rudnick & Wolfe, of Chicago, and Thomas M. Atherton, of Frings, Bagley, Atherton & Clark, of Pekin, for petitioner.", "Tyrone C. Fahner, Attorney General, of Springfield (Michael Paschon and John Brunsman, Assistant Attorneys General, of counsel), for respondent J. Thomas Johnson.", "Thomas J. Homer, State\u2019s Attorney, of Lewiston (James Lloyd, Special Assistant State\u2019s Attorney, of Canton, of counsel), for respondents Vernon Thompson et al.", "James L. Donnelly, Jr., and Wayland B. Cedarquist (Boodell, Sears, Sugrue, Giambalvo & Crowley, of Chicago, of counsel), for amicus curiae Illinois Manufacturer\u2019s Association.", "Laurence D. Lasky, Paul F. Hanzlik, William P. Suriano, and John W. Treece, of Isham, Lincoln & Beale, of Chicago, for amicus curiae Commonwealth Edison Company.", "Brent S. Bohlen, of Springfield, for amicus curiae Taxpayers\u2019 Federation of Illinois.", "Froehling, Taylor & Weber, of Canton, for amicus curiae Canton Union School District No. 66.", "Frederic S. Lane, Ralph E. Loomis, and Thomas W. Dressler, of Sonnenschein, Carlin, Nath & Rosenthal, of Chicago; Charles R. Zalar, State\u2019s Attorney, of Morris; and Eugene W. Hayes, of Dunn & Hayes, of Morris, for amici curiae Certain Zion Township (Lake County) and Grundy County Taxing Bodies and Assessing Officials." ], "corrections": "", "head_matter": "(No. 53566.\nCENTRAL ILLINOIS LIGHT COMPANY, Petitioner, v. J. THOMAS JOHNSON, Director of Revenue, et al., Respondents.\nOpinion filed March 18, 1981.\nSIMON, J., took no part.\nTerry F. Moritz, Vicki A. Thompson, and Richard A. Angell, of Rudnick & Wolfe, of Chicago, and Thomas M. Atherton, of Frings, Bagley, Atherton & Clark, of Pekin, for petitioner.\nTyrone C. Fahner, Attorney General, of Springfield (Michael Paschon and John Brunsman, Assistant Attorneys General, of counsel), for respondent J. Thomas Johnson.\nThomas J. Homer, State\u2019s Attorney, of Lewiston (James Lloyd, Special Assistant State\u2019s Attorney, of Canton, of counsel), for respondents Vernon Thompson et al.\nJames L. Donnelly, Jr., and Wayland B. Cedarquist (Boodell, Sears, Sugrue, Giambalvo & Crowley, of Chicago, of counsel), for amicus curiae Illinois Manufacturer\u2019s Association.\nLaurence D. Lasky, Paul F. Hanzlik, William P. Suriano, and John W. Treece, of Isham, Lincoln & Beale, of Chicago, for amicus curiae Commonwealth Edison Company.\nBrent S. Bohlen, of Springfield, for amicus curiae Taxpayers\u2019 Federation of Illinois.\nFroehling, Taylor & Weber, of Canton, for amicus curiae Canton Union School District No. 66.\nFrederic S. Lane, Ralph E. Loomis, and Thomas W. Dressler, of Sonnenschein, Carlin, Nath & Rosenthal, of Chicago; Charles R. Zalar, State\u2019s Attorney, of Morris; and Eugene W. Hayes, of Dunn & Hayes, of Morris, for amici curiae Certain Zion Township (Lake County) and Grundy County Taxing Bodies and Assessing Officials." }, "file_name": "0275-01", "first_page_order": 361, "last_page_order": 369 }