January-February Vol. 5, No. 1

Casenotes

Illinois

Taxation

In re Skidmore, 2011 IL App (2d) 100, 730, 953 NE2d 981, 352 Ill Dec 300 (2d D, 2011).

Facts: Robert Skidmore, as Treasurer of Lake County, IL assessed the city of Waukegan, IL with back property taxes on land that the city had acquired after the previous owner abandoned it in bankruptcy. The city filed a tax objection, arguing that the unpaid property taxes did not have to be paid because Section 21-95 of the Illinois Property Tax Code provides that all property taxes are null and void for a municipality acquiring property through judicial deed. The property was previously owned by the Outboard Marine Corporation (OMC) and was a "superfund" site, meaning it contained hazardous materials, in this case the toxic substance polychlorinated biphenyl.

In bankruptcy, OMC's trustee moved to abandon the property, the city of Waukegan expressed interest in acquiring it and the court authorized OMC and Waukegan to enter into an agreement for transfer of the property. Skidmore argued that by acquiring the property this way, the city did not acquire it through "judicial deed" as required by the statute and therefore owed the unpaid property taxes. The trial court agreed with Skidmore and granted summary judgment in favor of Skidmore. The city appealed.

Holding: Reversed. On appeal, the city argued that both the statute and public policy dictated that the taxes be abated. It argued that because the statute contains no limitations on the term "judicial deed," it should be construed broadly. It also argued that it should not have to pay taxes for policy reasons because, by acquiring "valueless, environmentally contaminated property," it was acting responsibly to protect its citizens.

The appellate court acknowledged that this was a case of first impression, as the term "judicial deed" is not defined in the Property Tax Code or in any previous case law. The section at issue was first enacted in 1994 and at the time specified that the term judicial deed only referred to a deed issued under Section 11-31-1. In 2000, the statute was amended to remove the reference to Section 11-31-1 and thus, the appellate court said, the code "clearly broadened the term judicial deed." Because this was the version of the code that applied to the case, the court held that the term "judicial deed" was broad enough to encompass the city's situation. The court also agreed with the city's argument that there were sound policy reasons for a municipality to not be charged property taxes.

The court concluded that the legislative intent of Section 21-95 "is clearly in furtherance of that policy." The court held that the statute unambiguously allowed for the abatement of taxes in a judicially authorized transfer of property, reversed the trial court's award of summary judgment and instead granted summary judgment to the city.

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