Phoenix Bond & Indem. Co. v. Pappas
| Decision Date | 01 December 2000 |
| Docket Number | No. 89098.,89098. |
| Citation | 741 N.E.2d 248,194 Ill.2d 99,251 Ill.Dec. 654 |
| Parties | PHOENIX BOND & INDEMNITY COMPANY, et al., Appellees, v. Maria PAPPAS, Cook County Treasurer and ex-officio County Collector of Cook County, Appellant. |
| Court | Illinois Supreme Court |
Jeffrey S. Blumenthal, Rodney C. Slutzky, Chicago, for appellants.
Richard A. Devine, State's Attorney, Chicago (Patrick T. Driscoll, Jr., and Randolph T. Kemmer, Assistant State's Attorneys, of counsel), for appellee.
This litigation challenges a rule promulgated by the Cook County collector regarding the acceptance of penalty bids at the County's annual tax sale. On cross-motions for summary judgment, the circuit court of Cook County found the rule invalid and permanently enjoined its enforcement. The appellate court reversed. 309 Ill.App.3d 779, 243 Ill.Dec. 248, 723 N.E.2d 280. We granted leave to appeal (177 Ill.2d R. 315) and now affirm the appellate court's judgment.
The procedures governing tax sales are set forth in article 21, division 4, of the Property Tax Code (35 ILCS 200/21-190 et seq. (West 1996)). That statute provides that after judgment has been rendered against property for nonpayment of taxes and the requisite notice has been issued, the county collector is to offer the property for sale at a public sale. 35 ILCS 200/21-190 (West 1996). Once the property is sold, the county clerk issues a certificate of purchase to the buyer, countersigned by the collector, describing the property; indicating the date of sale and the amount of taxes, special assessments, interest and costs for which the property was sold; and confirming that payment of the sale price has been made. 35 ILCS 200/21-250 (West 1996).
Issuance to a tax buyer of a certificate of purchase for delinquent taxes does not affect the delinquent property owner's legal or equitable title to the property. See In re Petition of Conrad Gacki Profit Sharing Fund for Tax Deeds, 261 Ill. App.3d 982, 984, 199 Ill.Dec. 927, 634 N.E.2d 1281 (1994). The owner or person interested in the property, other than an undisclosed beneficiary of an Illinois land trust, has the right to redeem the property from the sale. 35 ILCS 200/21-345 (West 1996); Ill. Const. 1970, art. IX, § 8. If the redemption period expires and the property has not been redeemed, the tax buyer or the buyer's assignee may obtain a tax deed for the property. 35 ILCS 200/22-30, 22-40 (West 1996). If the property is redeemed within the statutory period, the certificate of purchase gives the tax buyer or the buyer's assignee the right to receive the money paid to redeem the property. 31B Ill. L. & Prac. Revenue & Taxes § 85, at 320 (West 1997).
To redeem property sold at a tax sale, the owner or person interested in the property must pay the amount of the certificate of purchase plus a penalty, computed through the date of redemption as a percentage of the certificate amount. 35 ILCS 200/21-355 (West 1996). The percentage rate used in computing the penalty is determined by the bidders at the tax sale. When potential buyers compete against each other at the sale, the penalty percentage rate is, in fact, the only thing subject to bid.1 Each bidder is required to specify a rate for computing the penalty, up to a maximum of 18%. The bidder offering the least penalty percentage rate, i.e., the bidder who is willing to allow the owner to redeem his property for the smallest penalty, is allowed to purchase the property. 35 ILCS 200/21-215 (West 1996).
The controversy before us today arose when bidders at Cook County's 1996 annual tax sale, held in January of 1998, began making multiple, simultaneous, identical bids for the maximum statutory penalty percentage rate of 18%. When this occurred, the collector's office initially responded by selecting a winning bid at random from among the identical bidders. The result was that during the first six days of the sale, approximately 95% of the properties sold at the maximum penalty percentage rate. Only about 5% of the properties were disposed of through normal competitive bidding.
Believing that the competition contemplated by the statutory tax sale scheme was being impaired and concerned that its random bid selection policy did not comport with the law, the collector's office instituted a new policy. That policy was explained to bidders as follows:
Upon implementation of this policy, competitive bidding returned to the sale. Of properties which attracted bids, only a small percentage sold at the maximum statutory rate. The rates bid fell as low as zero percent, and there was apparently a discernible minimum bid for each parcel sold. While the new policy was in effect, only four properties of the thousands offered for sale were forfeited because of multiple, simultaneous, identical bids.
The plaintiffs in this case were all bidders on the four forfeited properties. They brought suit in the circuit court of Cook County to enjoin enforcement of the collector's new policy. While the matter was pending and while the 1996 annual tax sale was still underway, plaintiffs succeeded in obtaining a temporary restraining order to block the collector from declaring as forfeited property that which had received only multiple, simultaneous, identical bids. Immediately thereafter, bidders at the sale resumed the practice of making multiple, simultaneous bids at the maximum statutory penalty rate of 18%.
The collector brought an interlocutory appeal to challenge the temporary restraining order. The appellate court affirmed without a written opinion. After the matter returned to the circuit court, the parties filed cross-motions for summary judgment. The circuit court granted the motion filed by plaintiffs, denied the motion filed by the collector, and permanently enjoined enforcement of the new policy.
In ruling as it did, the circuit court took the position that the new policy was not authorized by statute and that the collector had no power to dispose of property at tax sales except as specifically provided by law. The appellate court disagreed. 309 Ill.App.3d 779, 243 Ill.Dec. 248, 723 N.E.2d 280. It ruled that the collector's power to conduct tax sales necessarily carried with it the power to set reasonable ground rules for the auction, provided that such rules are consistent with the statutory scheme erected by the legislature.
The appellate court was correct in rejecting the circuit court's narrow view of the collector's authority. Contrary to the position taken by the circuit court, the collector is not confined to those actions specifically detailed in the Property Tax Code. When the General Assembly conferred on county collectors the power to conduct tax sales, it also conferred, by implication, the authority to do all that is reasonably necessary to execute that power. Lake County Board of Review v. Property Tax Appeal Board, 119 Ill.2d 419, 427, 116 Ill.Dec. 567, 519 N.E.2d 459 (1988).
County collectors are permitted to "exercise discretion to accomplish in detail what is legislatively authorized in general terms." Lake County Board of Review, 119 Ill.2d at 428, 116 Ill.Dec. 567, 519 N.E.2d 459.
The specific policy adopted by the collector in this case was fully consistent with the general statutory scheme established by the legislature. As previously indicated, section 21-215 of the Property Tax Code provides that "[t]he person at the sale offering to pay the amount due on each property for the least penalty percentage shall be the purchaser of that property." 35 ILCS 200/21-215 (West 1996). Under this statute, there is no uncertainty about who will be allowed to buy property offered at a tax sale. The property may only be purchased by the bidder who offers to pay the amount due for the least penalty percentage.
The problem faced by the collector in this case was what to do when there is no discernible lowest bid. As the collector's new policy correctly recognized, when all of the bids are for precisely the same penalty percentage, none of the bidders can be said to have offered "to pay the amount due * * * for the least percentage" as specified in section 21-215. There being no lowest bidder, none of the bidders meet the statute's qualifications to purchase the property.
The Property Tax Code contains no express provisions for dealing with this situation. In the collector's view, however, sales which failed for lack of a qualified low bidder were analogous to sales which failed because there were no bidders at all. In either case, the result is the same. The property offered at sale cannot be sold because there is no proper bidder to sell it to.
Where property is "not sold for want of bidders," the Property Tax...
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