72

exemption thereof, but because the General Assembly, while it might have extended the right of exemption to that property, had not seen fit to do so." And the courts have always taken the position that statutes granting tax exemptions should be construed strictly in favor of the state. Property will not be entitled to exemption from taxation unless it is clearly within, not only the constitutional authorization, but the terms of the statute under which the right to exemption is claimed.73 And the burden is on the person asserting the claim of exemption from taxation with respect to certain property to prove clearly and conclusively that the property in question is exempt under the provisions of a constitutional statute."

Because of the fact that all exemptions from taxation should be construed strictly, a statute providing for tax exemptions will not be given a retrospective effect unless it is clear that the General Assembly so intended. And so it was held in People v Deutsche Gemeinde" that property, which became exempt under a statute effective July 1, 1909, was liable for the taxes levied thereon prior to that date.

Power of the General Assembly. This section of the constitution is a limitation on the power of the General Assembly. "The enumeration in the constitution of certain specified property which may be exempted is a limitation upon the power of the legislature to exempt any other property, under the well known rule that an enumeration of certain specified things excludes all others not therein mentioned."76 In accordance with the rule thus announced it has been held that the General Assembly has no power to exempt from taxation promissory notes held by a building and loan association and executed by its members, moneys held by fraternal beneficiary societies, and the capital stock of corporations." And the Attorney General has held that there is no constitutional authority to exempt the property of the state masonic home for aged masons, the Grand Army of the Republic, or war veterans, or to exempt shares of bank stock.78 In Easton v Board of Review it was held that city warrants in the hands of a purchaser were not exempt from taxation. The decision was based on the fact that there was no law authorizing the exemption of such warrants but the court was evidently of the opinion that the General Assembly would have no constitutional power to provide for their exemption.

The constitution provides that "such used exclusively for

property as may be school, religious, cemetery and charitable purposes may be exempted from taxation by general law." This is a limitation on the power of the General Assembly. Property used in connection with any one or more of these purposes cannot be granted exemption from taxation unless used exclusively for such purpose or purposes.

7 Cook County v City of Chicago, 103 Ill. 646 (1882); In the matter of Swigert, 123 III. 267 (1887); People v City of Chicago, 124 Ill. 636 (1888); Sanitary District of Chicago v Martin, 173 Ill. 243 (1898); People v St. Francis Academy, 233 I11. 26 (1908).

73 People v Seaman's Friend Society, 87 Ill. 246 (1877); Monticello Seminary v People, 106 Ill. 398 (1883); People v Anderson, 117 Ill. 50 (1886); Montgomery v Wyman, 130 Ill. 17 (1889); McCullough v Board of Review, 186 Ill. 15 (1900); Sanitary District of Chicago v Hanberg, 226 Ill. 480 (1907); Board of Directors v Board of Review, 248 Ill. 590 (1911).

74 People v Deutsche Gemeinde, 249 Ill. 132 (1911).

75 249 Ill. 132 (1911).

70 People v Deutsche Gemeinde. 249 Ill. 132 (1911). The same rule was applied under the constitution of 1848; see People v Barger, 62 Ill. 452 (1872). The property of the University of Illinois is State property and may, therefore, be granted exemption from taxation. See Board of Trustees v Board of Supervisors, 76 Ill. 184 (1875).

77 Loan and Homestead Association v Keith, 153 Ill. 609 (1894); In re St. Louis L. & I. Co., 194 Ill. 609 (1902); Supreme Lodge v Board of Review, 223 [11. 54 (1906); Consolidated Coal Co. v Miller, 236 Ill. 149 (1908); People v National Box Co., 248 Ill. 141 (1911).

78 Report Attorney General, 1908, p. 436; 1910, pp. 60, also, Report Attorney General 1910, pp. 59, 566, 576. 79 183 Ill. 255 (1899).

62; 1912, p. 742; see,

When is property used exclusively for any one or more of these purposes. This question has caused considerable difficulty and very few of the decisions of the Supreme Court on this point have been concurred in by all of the judges of that court; in fact most of the decisions have been made by a bare majority of the judges. The effect of the decisions however, is to place a strict construction on the word "exclusively."

With reference to the exemption from taxation of property used exclusively for school purposes it has been held that a school "is a place where systematic instruction in useful branches is given by methods common to schools and institutions of learning, which would make the place a school in the common acceptation of the word", and that the property of dancing, riding and deportment schools can, under no circumstances, be released from its liability to pay taxes.So But when is property owned by a school, such as is contemplated by the constitution, used exclusively for school purposes? Land owned by a school but not used for any purpose is not a proper subject for exemption from taxation.81 "The fact that the rents and revenues of property are devoted to school purposes does not exempt the property from taxation. The property itself must be directly used for school purposes before it is entitled to be exempted.' But lands owned by a private educational institution and used for the purpose of growing vegetables and fruits for the use of those attending the institution, and not with a view to profit, are used exclusively for school purposes and, as such, are subject to exemption from taxation.83

9984

9782

"As applied to the uses of property, a religious purpose means 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." It has been held that there is no constitutional authority for the exemption of "parsonages or residences actually and exclusively used by persons devoting their entire time to church work." In People v First Congregational Church it was said: "Where a building is used primarily for religious purposes and secondarily for some secular purpose, as for the business meetings of the church corporation, or if there should be in the church building some room used as a lodging room for the sexton or some other person employed by the organization, the building would not thereby lose its character as one used for religious purposes, but where the property is used primarily for a family residence by the pastor it cannot be held that it is used exclusively for religious purposes. The legislature cannot, by its enactment, make that a religious purpose which in fact is not a religious purpose."

A private hospital which receives free of charge all who apply for admission, but which maintains more desirable rooms for those who are willing to pay for them, is, nevertheless, an institution for charitable purposes, if the money that it receives is used for the enlargement and betterment of the hospital and not with a view to profit.86

(As to the power of the General Assembly to exempt property from special assessments and special taxation, see discussion subsequent subheading, "Special assessments and special taxation")

Property donated for school purposes. Section 2 of article 8 of the constitution provides that "all lands, moneys, or other property, donated granted or received for school, college, seminary or university purposes,

80 People v Deutsche Gemeinde, 249 Ill. 132 (1911).

81 People v Deutsche Gemeinde. 249 Ill. 132 (1911); Theological Seminary v People, 101 Ill. 578 (1882); Monticello Seminary v Board of Review, 242 III. 477 (1909).

82 Monticello Seminary v Board of Review, 249 Ill. 481 (1911).

83 Monticello Seminary v People, 106 Ill. 398 (1883).

84 People v Deutsche Gemeinde, 249 Ill. 132 (1911).

85 232 Ill. 158 (1908); see, also, First Congregational Church v Board of Review, 254 Ill. 220 (1912); but see In re Walker, 200 Ill. 566 (1903).

80 Sisters of St. Frances v Board of Review, 231 Ill. 317 (1907). See People

and the proceeds thereof, shall be faithfully applied to the objects for which such gifts or grants were made." This section of article 8 relates to donations of property for school purposes made prior to the adoption of the present constitution. But the property of schools, which is included within the meaning of section 2, is, by virtue of the section itself, exempt from general taxation and from special assessments and special taxation. (See discussion article 8, section 2.)

Effect of the exemption provisions in special charters granted prior to 1870. Section 3 of article 9 of the constitution of 1848 provided that "the property of the state and counties, both real and personal, and such other property as the General Assembly may deem necessary for school, religious and charitable purposes, may be exempted from taxation." Under this provision the General Assembly in granting special charters to school, religious and charitable corporations, frequently inserted provisions therein exempting such corporations from all or a part of their taxes. In the early cases after the adoption of the constitution of 1870 the Supreme Court of Illinois held that the General Assembly under the constitution of 1848 had no power to "exempt from taxation property owned by educational, religious, or charitable corporations which was not itself used directly in aid of the purposes for which such corporations were created, but which was held for profit merely, although the profits were devoted to the proper purposes of such corporations." 87 But this holding was reversed by the United States Supreme Court which held that the General Assembly, under the constitution of 1848, had full power to exempt from taxation any or all property owned by such corporations, and that having done so in their charters a binding contract was created. The Supreme Court of this state then adopted the view of the United States Supreme Court." The provisions of these special charters relating to exemption from taxation are construed strictly, however, and unless it clearly appears that the property claimed to be exempt is included within the exemption provisions of the charters the claim will be denied.90

88

However, there was no authority, under the constitution of 1848, to exempt the property of school, religious and charitable corporations from special assessments. (See discussion subsequent subheading, "Special assessments and special taxation").

Commutations-Illinois Central Railroad Company. Commutation of taxes means the right, privilege or duty of paying a specific sum of money or something else of value in lieu of taxes on property in proportion to the value of the property. Since the effect of commutation of taxes is to relieve certain property from the liability to pay taxes in proportion to value, the obvious effect is to exempt that property from taxation in the ordinary and usual sense of that word. Under the constitution of 1848 it was held that there was no prohibition on the power of the General Assembly to provide for the commutation of taxes. (See discussion article 9, section 6, subheading, "Commutation of state taxes"). And, while section 6 of this article apparently forbids the commutation of state taxes, it must be conceded that the opinion of the court, in the case of Raymond v Hartford Fire Insurance Company," seems to hold that the General Assem

87 Northwestern University v People, 86 Ill. 141 (1877).

89 Northwestern University v People, 99 U. S. 309 (1878).

89 People v Soldier's Home, 95 Ill. 561 (1880); In re Northwestern University, 206 Ill. 64 (1903); Northwestern University v Hanberg, 237 Ill. 185 (1908).

90 Bloomington Cemetery Association v People, 170 Ill. 377 (1897); People v Theological Union, 171 Ill. 304 (1898); People v Bennett Medical College, 248 Ill. 608 (1911); Chicago Theological Seminary v Illinois, 188 U. S. 662 (1903). 91 196 Ill. 329 (1902).

bly, under the last clause of section 1 of article 9, may nevertheless provide for the taxation of the property of certain persons and corporations for state purposes by a method otherwise than in proportion to value. (See discussion of that case article 9, section 1, center subheading "Uniformity"; see, also, discussion article 9, section 6, subheading "Commutation of state taxes," and discussion article 9, section 9, subheading, "Commutation of municipal taxes").

The Illinois Central Railroad Company was incorporated under a special act of the General Assembly in 1851. The special charter, while making detailed provision for the taxation of the property of the railroad company, expressly provides that the company shall pay not less than seven per cent of its gross receipts into the state treasury in lieu of all other taxes. (Private Laws 1851, p. 61). The effect of these provisions was to exempt the property of the railroad company from property taxes. The special charter of the railroad was expressly affirmed and recognized by the present constitution. (See separate section relating to the Illinois Central Railroad).

93

The exemption from ordinary taxes applies, however, only to the charter lines mentioned in the special charter. Other lines of the railroad not mentioned in the charter and not necessarily incidental to the operation of the charter lines are subject to taxation in the same manner as other property.92 But switch tracks, turn-outs and bridges necessary to the proper operation of the charter lines are property within the exemption provisions of the special charter no matter when constructed, and are not subject to taxation in the usual manner." And it would seem that any other property of the company, even though not used directly in the transportation of persons or freight, is exempt if that property is reasonably necessary for the proper and efficient operation of the charter lines. Thus, a stone quarry belonging to the railroad company, and used for the purpose of acquiring necessary stone in the repair of the roadbed of the charter lines is exempt from ordinary taxation.91 But a grain elevator of the company leased to private parties, and apparently not necessary for the efficient operation of the charter lines, is subject to taxation in the same manner as other property.95 Nor is a steamboat of the company used for transporting passengers and freight across the Ohio river exempt from the usual tax on property even though the only purpose of the boat was to facilitate the business of the charter lines south of the Ohio river. The court took the view that the charter of the company did not contemplate transportation by water and that, therefore, the operation of the steamboat was not incidental or indispensable to the efficient conduct of the charter lines. (See discussion article 9, section 6, subheading, "Commutation of state taxes").

98

The property of the Illinois Central Railroad Company, however, is not exempt from special assessments and special taxation. (See discussion following subheading.)

9 State of Illinois v I. C. R. R. Co., 246 Ill. 188 (1910). The charter lines and non-charter lines of the railroad company are operated as one system, and it is sometimes very difficult to determine the gross receipts of the charter lines. This case also discusses the methods by which the gross receipts of the charter lines are to be ascertained. See, also, People v I. C. R. R. Co., 273 Ill. 220 (1916).

93 State Board of Equalization v People, 229 Ill. 430 (1907).

9 People v I. C. R. R. Co. 231 Ill. 151 (1907).

95 In re Swigert, 119 Ill. 83 (1886); I. C. R. R. Co. v People, 119 Ill. 137 (1886).

96 I. C. R. R. Co. v Irvin, 72 Ill. 452 (1874). The special charter also granted large tracts of land to the railroad company and with reference to these lands it was provided that "the lands selected under said act of Congress, and hereby authorized to be conveyed. shall be exempt from all taxation under the laws of this state until sold and conveyed by said corporation or trustees." For judicial decisions construing this provision, see Gilkerson v Brown, 61 Ill. 486 (1871); I. C. R. R. Co. v Goodwin, 94 Ill. 262 (1880): Champaign County v

Special assessments and special taxation. This section of article 9, expressly authorizes the exemption from taxation of the property of the state, counties and other municipal corporations, property used exclusively by agricultural and horticultural societies, and property used exclusively for school, religious, cemetery and charitable purposes. But what is meant by "taxation"? Does that term include special assessments and special taxation? It has been held that there is no constitutional authority for the exemption of such property from special assessments and special taxation.97 The property of the state, however, is exempt from special assessments and special taxation, because section 26 of article 4 provides that the state "shall never be made defendant in any court of law or equity." (See discussion article 4, section 26, subheading, "Suits against the state in its own name.")

98

The General Assembly under the constitution of 1848 had no power to exempt property from special assessments." (See discussion preceding subheading "Effect of the exemption provisions in special charters granted prior to 1870.")

The property of the charter lines of the Illinois Central Railroad Company may be granted exemption from general taxation but not from special assessments or special taxation.1 (See discussion preceding sub-heading.)

Property donated to schools prior to 1870, and included within the meaning of section 2 of article 8, is exempt from general taxation and special assessments or special taxation. (See discussion article 8, section 2.)

Section 4. The General Assembly shall provide, in all cases where it may be necessary to sell real estate for the non-payment of taxes or special assessments, for State, county, municipal, or other purposes, that a return. of such unpaid taxes or assessments shall be made to some general officer, of the county, having authority to receive State and county taxes; and there shall be no sale of said property for any of said taxes or assessments but by said officer, upon the order of judgment of some court of record.

Effect on existing legislation. This section of the constitution had the effect of abrogating all existing statutes in conflict with it. Thus, that portion of the special charter of the city of Chicago which authorized the city collector to sell real estate for the non-payment of taxes was held inapplicable with respect to taxes levied after the adoption of the constitution, for the reason that the city collector was not a general county officer.2

Property subject to sale. While there is no constitutional authority for the exemption of property owned by counties from special assessments (see discussion article 9, section 3, subheading, "Special assessments and special taxation,") such property is not subject to sale for failure to pay delinquent assessments.3

97 South Park Commissioners v Wood, 270 Ill. 263 (1915); see, also, County of McLean v City of Bloomington, 106 Ill. 209 (1883); County of Adams v City of Quincy, 130 Ill. 566 (1889); City of Chicago v City of Chicago, 207 Ill. 37 (1904); Report Attorney General 1914, p. 779.

99 In re City of Mt. Vernon, 147 Ill. 359 (1893).

City of Chicago v Baptist Theological Union, 115 Ill. 245 (1885).

1 Illinois Central Railroad Co. v City of Decatur, 126 Ill. 92 (1888); Illinois Central Railroad Co. v City of Decatur, 147 U. S. 190 (1893).

2 Hills v City of Chicago, 60 Ill. 86 (1871); Garrick v Chamberlain, 97 Ill. 620 (1881).

3 County McLean v City of Bloomington, 106 Ill. 209 (1883); Report Attorney General 1910, p. 583.