Opinion ID: 3135555
Heading Depth: 2
Heading Rank: 1

Heading: Jurisdiction Over “Unauthorized By Law” Claim

Text: Before this court, defendants first argue that the circuit court lacked subject matter jurisdiction to consider plaintiff’s declaratory judgment action that attacked the assessment. An argument challenging the subject matter jurisdiction of the circuit court presents a question of law that this court will review de novo. Blount v. Stroud, 232 Ill. 2d 302, 308 (2009). Moreover, the arguments of the parties present an issue of statutory construction, which is also a matter that this court reviews de novo. In re Donald A.G., 221 Ill. 2d 234, 246 (2006). Both parties acknowledge the “unauthorized by law” doctrine as one exception to the general common law rule that in the field of taxation and revenue cases, equity will not assume jurisdiction to grant relief where a “complete and adequate remedy” at law exists. Lackey v. Pulaski Drainage District, 4 Ill. 2d 72, 78 (1954); see also Clarendon Associates v. Korzen, 56 Ill. 2d 101, 107 (1973). The parties disagree, however, as to whether the doctrine is applicable under the particular circumstances of the present case. We note that public officials have no taxing power except that which is delegated to them by the legislature. Santiago v. Kusper, 133 Ill. 2d 318, 325 (1990), citing Ill. Const. 1970, art. IX, §10. The obligation of citizens to pay taxes is purely a statutory creation, and taxes can be levied, assessed and collected only in the manner expressly spelled out by statute. People ex rel. Eitel v. Lindheimer, 371 Ill. 367, 371 (1939). A tax is therefore “unauthorized” when the taxing body has no statutory power to tax. See, e.g., Wood River -9- Township v. Wood River Township Hospital, 331 Ill. App. 3d 599, 606 (2002). It has also been held that the actions of an assessor are unauthorized by law where the assessor acts with respect to property over which he has not been given any jurisdiction by statute. Sanitary District of Chicago v. Young, 285 Ill. 351, 370 (1918). To be clear, the general rule is that a taxpayer is limited to first exhausting administrative remedies provided by statute beginning with the Board of Review–the remedy at law for an incorrect assessment–before seeking relief in the circuit court. Owens-Illinois Glass Co. v. McKibbin, 385 Ill. 245, 252 (1943); Young, 285 Ill. at 368. In that regard, the Property Tax Code is a comprehensive statute regulating the assessment and collection of taxes. In re Application of the County Treasurer, 214 Ill. 2d 253, 262 (2005); 35 ILCS 200/1–1 et seq. (West 2008). Sections 16–95 and 16–120 together provide that the Board of Review may revise or correct an assessment as appears to be just on complaint by a taxpayer that “any property is overassessed, underassessed, or exempt.” 35 ILCS 200/16–95, 16–120 (West 2008). The taxpayer then has the option of either appealing to the Property Tax Appeal Board (35 ILCS 200/16–160 (West 2008)) or filing a tax objection complaint in circuit court specifying “any objections  to the taxes in question” (35 ILCS 200/23–15 (West 2008)). Thus, the adequate remedy at law is to pay the taxes under protest and file a statutory objection. North Pier Terminal Co. v. Tully, 62 Ill. 2d 540, 546 (1976). It has been held, however, that the general rule requiring a taxpayer to seek the relief provided by statute is subject to two exceptions: a taxpayer need not look to the remedy at law but may seek injunctive or declaratory relief in circuit court where the tax or assessment is unauthorized by law or where it is levied upon property exempt from taxation. Clarendon Associates, 56 Ill. 2d at 107; Owens-Illinois, 385 Ill. at 252; see also Santiago, 133 Ill. 2d at 324; Inolex Corp. v. Rosewell, 72 Ill. 2d 198, 201-02 (1978). These two situations constitute independent grounds for equitable relief and in such cases it is not necessary that the remedy at law be inadequate. Clarendon Associates, 56 Ill. 2d at 107. Defendants argue that the assessment was authorized in this case based on the authority given to the assessor under section 9–70 of the Property Tax Code to tax “all other property.” 35 ILCS 200/9–70 -10- (West 2008). Specifically, that section provides as follows: “The Department [of Revenue] shall assess all pollution control facilities, low sulfur dioxide emission coal fueled devices, and property owned or used by railroad companies operating within this State, except noncarrier real estate. Local assessment officers shall assess all other property not exempted from taxation.” (Emphasis added.) 35 ILCS 200/9–70 (West 2008). The trouble with defendants’ argument is that the land itself at issue in this case is property “exempted from taxation,” and section 9–70 specifically precludes the assessor from assessing such exempt property. 35 ILCS 200/9–70 (West 2008). Furthermore, defendants misconstrue the definition of taxable “property” contained in the Property Tax Code where it is defined as “[t]he land itself, with all things contained therein, and also all buildings, structures and improvements, and other permanent fixtures thereon,  and all rights and privileges belonging or pertaining thereto, except where otherwise specified by this Code.” 35 ILCS 200/1–130 (West 2008). Defendants argue for the first time in their reply brief before this court that, because the words “rights and privileges” appear in the definition of “property,” defendants had the authority to assess licenses. This view is mistaken. As noted above, the Property Tax Code has been construed as not to authorize a tax or an assessment on exempt property that is merely licensed. See 35 ILCS 200/9–70 (West 2008); 35 ILCS 200/9–195 (West 2008); 35 ILCS 200/1–130 (West 2008); Kankakee County Board of Review, 226 Ill. 2d at 55; Jackson Park, 93 Ill. App. 3d at 547. Moreover, the reference to “rights and privileges” in section 9–70 is not a reference to a separate category of taxable property. Rather, it refers to the principle that when the assessor is assessing the value of real property in the hands of the owner, one of the components that comprises the valuation is the privilege possessed by the owner of having entered into a license or a lease as a licensor or lessor. But section 9–70 gives no authority to the assessor to tax or assess the licensee’s or lessee’s interest where the licensee or lessee by definition is not the actual owner of the land. Real estate taxes are only permitted against owners of land. The only exception to this rule is found in section 9–195 of the Property Tax Code (35 ILCS 200/9–195 (West 2008)), which allows the assessor to tax the leasehold interest of the lessee in property leased to it by an -11- owner whose property is exempt. More specifically, section 9–195 provides in relevant part as follows: “[W]hen property which is exempt from taxation is leased to another whose property is not exempt, and the leasing of which does not make the property taxable, the leasehold estate and the appurtenances shall be listed as the property of the lessee thereof, or his or her assignee. Taxes on that property shall be collected in the same manner as on property that is not exempt, and the lessee shall be liable for those taxes. However, no tax lien shall attach to the exempt real estate.” 35 ILCS 200/9–195 (West 2008). From the foregoing, it is apparent that if plaintiff possessed a mere license rather than a leasehold interest in this case, then the assessor would not have been authorized by law to assess the property. Thus, plaintiff’s claim that the assessment was not authorized because plaintiff did not possess a leasehold interest, but rather merely a license, fits squarely within the unauthorized-by-law exception, which allows challenges to be brought directly in circuit court without resort to any statutory remedy that might be applicable. We further note that the outcome of the challenge does not govern the jurisdiction of the circuit court to hear the merits. Rather, it is the nature of the challenge that governs the court’s jurisdiction. In reaching this conclusion, we find County of Knox ex rel. Masterson v. The Highlands, L.L.C., 188 Ill. 2d 546 (1999), analogous and supportive, even if not directly on point. There, the plaintiff filed a complaint for declaratory and injunctive relief in the circuit court, seeking a declaration that it could proceed to construct and operate a hog confinement facility on its property. The county had been preventing the plaintiff from building and operating such a facility through enforcement of its zoning rules. The circuit court granted the plaintiff’s motion for summary judgment, ruling that the county board lacked jurisdiction to proceed because the plaintiff was engaged in an “agricultural” purpose, which was exempt from zoning regulations under the Counties Code. See 55 ILCS 5/5–12001 (West