IN RE APPLICATION OF THE COUNTY COLLECTOR FOR JUDGMENT (Appellate Court Of Illinois Third District, May 24, 2011).
Defendant was the owner of real property consisting mainly of farmland. In 1985, Defendant entered into a lease agreement with Waterway Communications System, Inc. (Waterway) for a portion of the real property (the leased parcel). The term of the lease was for 25 years with an option for Waterway to extend the lease an additional 25 years. The lease was recorded in the county recorder's office. Waterway, at some point after entering into the lease agreement with Defendant, constructed a cellular/radio tower (the tower) on the leased parcel. In 1986, a "First Amendment to Lease Agreement" was entered between the parties and recorded in the county recorder's office. The amendment provided that Waterway will pay "ad valorem taxes levied and attributable to any improvements and facilities installed on the premises by [Waterway]."
Sometime prior to December 1, 2002, the county assessor assigned the tower its own separate tax identification number. The property tax record for the tower parcel contained the "legal description of the improvements on the leased parcel and the tower assessments." The tax record did not contain any land assessment. The current county assessor testified that he did not know why the tower and the farmland were assigned two different tax parcel identification numbers. All tax bills for the tower, however, were apparently sent to Waterway. It was undisputed that the Defendant property owner paid all taxes assessed and levied on the real property, which included the leased parcel. Those taxes were never delinquent. Defendant testified, however, that it never received a tax bill for the tower or had any knowledge that the taxes were delinquent and subject to a tax sale. The bills subsequently became delinquent and the tower was sold to Plaintiff at a tax sale.
In 2008, Plaintiff filed a petition for a tax deed. The petition sought a tax deed for not only the tower, but also the leased parcel on which the tower was located. A "Take Notice" was personally served on Defendant. Defendant subsequently filed a "Motion to Deny Issuance of Tax Deed, or in the alternative, Clarification of what Tax Buyer will receive." The motion alleged that Plaintiff should only receive, if he obtains a tax deed, the tower, and not the leased parcel. The motion also alleged that Defendant had paid all the property taxes on the farmland, which includes the leased parcel, but admitted that it did not pay the taxes on the improvements located on the leased parcel.
Plaintiff filed a motion to dismiss Defendant's motion for clarification. Plaintiff alleged that his tax sale certificate entitled him to both the tower and the leased parcel. Plaintiff argued that Illinois law does not allow personal property taxes to be imposed or assessed on personal property. Specifically, Plaintiff contended that if he is only allowed to obtain the tower, and not the leased parcel, then the county assessor was illegally assessing property taxes on personal property. The circuit court held that Plaintiff would receive rights in the tower, but not the leased parcel.
On appeal, the Appellate Court stated that it was undisputed that Defendant paid all taxes assessed and levied on the farmland, which included the leased parcel. The Appellate Court stated that Plaintiff's position simply defied logic in that it asserted the right to a tax deed for property that had never been subject to any delinquent taxes. In addition, the Appellate Court held that the county was illegally assessing property taxes on personal property (the tower) and found that the circuit court lacked jurisdiction to direct issuance of a tax deed in favor of Plaintiff for the tower.
The Appellate Court stated that pursuant to Illinois statute "Ad valorem personal property taxes shall not be levied on any personal property having tax situs in this State" and that Illinois courts have defined tangible personal property to mean that which may be seen, weighed, measured and estimated by the physical senses and which is capable of being possessed. The Appellate Court stated that the tower constituted tangible personal property, rather than real property. Thus, the tower was unlawfully assessed.
Because the tower was unlawfully assessed, the Appellate Court held there were never any property taxes legally due on the tower. Consequently, because there were no legal property taxes due, there could never be any delinquent taxes. Thus, because the tower was not subject to any delinquent taxes, the circuit court lacked jurisdiction to direct the issuance of a tax deed in favor of Plaintiff for the tower. Accordingly, the Appellate Court vacated the circuit court's order directing issuance of a tax deed in favor of Plaintiff for the tower.
Anthony Dorland
DorlandA@moss-barnett.com
(612) 877-5258