County Treasurer, Application of, 1-92-2760

• Decision Date: 14 October 1994
• Docket Number: No. 1-92-2760,1-92-2760
• Citation: 642 N.E.2d 741,267 Ill.App.3d 993,204 Ill.Dec. 840
• Parties: , 204 Ill.Dec. 840 In the Matter of the Application of the COUNTY TREASURER, etc. (MidFirst Bank, Section 2-1401 Petitioner-Appellant, v. Midwest Partnership, Petitioner and Section 2-1401 Respondent- Appellee).
• Court: United States Appellate Court of Illinois

Page 741

642 N.E.2d 741

267 Ill.App.3d 993, 204 Ill.Dec. 840

In the Matter of the Application of the COUNTY TREASURER etc. (MidFirst Bank, Section 2-1401 Petitioner-Appellant, v. Midwest Partnership, Petitioner and Section 2-1401 Respondent- Appellee).

No. 1-92-2760.

Appellate Court of Illinois First District, Fifth Division.

Oct. 14, 1994.

Rehearing Denied Nov. 30, 1994.

Rudnick & Wolfe, Chicago (Seymour F. Simon, Gerald B. Lurie, Peter G. Hallam, of counsel), Fisher & Fisher, Chicago (Jan B. Gaines, of counsel), for appellant.

David R. Gray, Laura A. Gray, Chicago, for appellee.

Justice COUSINS delivered the opinion of the court:

The appellant, MidFirst Bank, appeals the denial of its Section 2-1401 petition to vacate an order granting the appellee, Midwest Partnership, a tax deed on a homestead property in Cook County. Appellant asserts that it meets either of two standards which are grounds for relief under Ill.Rev.Stat.1993, 35 ILCS 205/266 (West 1993): 1) Midwest Partnership obtained the deed by fraud or deception, or 2) that MidFirst Bank reasonably relied on an error by the county clerk in failing to redeem in timely fashion. We affirm.

BACKGROUND

In January of 1989, Midwest Partnership purchased the first installment of a five-installment special assessment at the regularly scheduled tax sale for 1987 special assessments. In early May of 1991, MidFirst Bank was served with written notification (the "Take Notice") by Midwest Partnership. The Take Notice stated that Midwest Partnership had purchased "Installment No. 1" of the special assessment, certificate number 09773B, and that the property had been sold for delinquent taxes on January 25, 1989. The Take Notice further stated that the period for its redemption would expire September 6, 1991, following which a tax deed proceeding would occur on September 16, 1991.

MidFirst Bank then wrote to "Cook County--Redemption Department" the following letter:

"Dear Sirs:

Please find enclosed our check # 108410 dated June 11, 1991 for $2.00.

We are requesting a Redemption Statement for the above referenced parcel for the tax year(s) Spec. Assessment. We have enclosed a postage-paid envelope for your convenience in remitting the statement to us.

If you have any questions, please contact the undersigned at 1-800-654-4566, ext. 375."

On July 2, 1992, MidFirst Bank received from the County Clerk (the "Clerk") an Estimate of Cost of Redemption (the "Estimate"). However, the Estimate stated that it referred to the tax sale of February 8, 1991, Installment No. 3, certificate number 10263B, purchased by Jona Inc. On July 3, MidFirst Bank sent the Clerk the Estimate and the necessary money to redeem Installment No. 3.

The Clerk sent back to MidFirst Bank a copy of the Estimate stamped with "Deposit Recorded 7-12." On July 29 the Clerk sent MidFirst Bank a Redemption Certificate which again repeated what had been redeemed "Installment No. 3 due and unpaid for the year 1989," the day of sale was "the 8th day of February 1989," that "Jona Inc." was the purchaser, and that the redeemed certificate was Certificate No. 10263B.

Installment No. 1 was not redeemed, and Midwest Partnership filed an Application for an Order directing Issuance of Tax Deed on September 16, 1991. On October 4, 1991, a hearing was held on the application. It concluded with the following exchange:

"The Court: Do you know whether any of the taxes were paid by anybody, including yourself?

[Midwest Partnership]: I have a record that the second installment of the Special Assessment Warrant was sold to Elsie Bee. The Third Installment was sold to Jona Inc. I have no record of the fourth installment or the general taxes.

The Court: Apparently the owner was not paying them.

[Midwest Partnership]: Apparently not, Judge.

The Court: All right, I will take this under advisement. When the transcript is prepared and evidence of the paid taxes up to date is present, I will take whatever action is necessary."

On December 16, 1991, the trial court entered an order which included the following:

"This cause coming on for hearing upon the motion of Midwest Partnership, for a finding of proof of payment of the general taxes and/or special assessments ... FINDS: That all of the taxes that have become due and payable subsequent to the sale of the taxes have been paid or redeemed.

WHEREFORE IT IS HEREBY ORDERED that Exhibits A, B, C, D, E, F, and G, are admitted into evidence and made a part of the record of these proceedings."

The next day, December 17, 1991, the court entered an order directing issuance of the tax deed.

Midwest sent a Notice of Motion for an order of Possession on April 7, 1992, and the trial court entered an Order for Possession on April 15, 1992. On May 27, 1992, MidFirst Bank filed a Section 2-1401 Petition to Vacate Order Directing County Clerk to Issue Tax Deed (the "2-1401 petition"). A hearing was held July 8, 1992, at which the MidFirst Bank's only argument was that its failure to redeem was the result of the Clerk's negligence in issuing the Estimate. The trial court held:

"From the facts as I see them, I see that the error was not on the part of the Clerk's office. The error was on the part of the bank, MidFirst Bank, who did not examine the documents that they received and did not redeem the proper installment of taxes...."

The trial court entered an order denying the 2-1401 Petition, from which MidFirst Bank appeals. MidFirst Bank claims it is entitled to relief under Ill.Rev.Stat.1993, 35 ILCS 205/266 (West 1993), either because of deception by Midwest Partnership or because of the Clerk's negligence. Section 266 of the Revenue Act provides in pertinent part:

"Tax deeds issued pursuant to this Section are incontestable except by appeal from the order of the court directing the county clerk to issue the tax deed. However, relief from such order may be had under Section 2-1401 of the Code of Civil Procedure in the same manner and to the same extent as may be had under that Section with respect to final orders and judgments in other proceedings. However, the grounds for such relief shall be limited to a showing by clear and convincing evidence that the tax deed had been procured by fraud or deception by the tax purchaser or his assignee.... In cases regarding the sale of homestead property in counties with a population of more than 3,000,000 inhabitants, a tax deed may also be voided by the court upon petition, filed not more than three months after an order for tax deed was entered, if the court finds that the property was owner occupied on the expiration date of the period of redemption and that the order for deed was effectuated pursuant to a negligent or willful error made by an employee of the county clerk or county collector during the period of redemption from said sale that was reasonably relied upon to the detriment of any person having a redeemable interest....

This Section shall be liberally construed so that tax deeds herein provided for shall convey merchantable title." (Emphasis added.) Ill.Rev.Stat.1993, 35 ILCS 205/266 (West 1993) (formerly Ill.Rev.Stat.1991, ch. 120, par. 747).

OPINION

I.

A 2-1401 petition must set forth a meritorious defense in the original action and the petitioner's due diligence in both presenting the claim and filing the petition. (Klein v. LaSalle National Bank (1993), 155 Ill.2d 201, 205, 184 Ill.Dec. 420, 613 N.E.2d 737.) The 2-1401 petition allows a party to bring before the court matters unknown to the party and the court at the time of judgment which would have precluded its entry. (Krol v. Wincek (1994), 258 Ill.App.3d 706, 708, 196 Ill.Dec. 856, 630 N.E.2d 1021.) Relief is appropriate only where the petition's allegations are proved by a preponderance of the evidence. (Klein, 155 Ill.2d at 205, 184 Ill.Dec. 420, 613 N.E.2d 737.) On appeal from a disposition for section 2-1401 relief, the standard applied by reviewing courts is whether the trial court abused its discretion. Klein, 155 Ill.2d at 206, 184 Ill.Dec. 420, 613 N.E.2d 737.

MidFirst Bank's initial claim is that deception by Midwest Partnership in obtaining the Tax Deed merits the granting of its 2-1401 petition. MidFirst Bank cites as fraudulent behavior Midwest's failure to later alert the judge to the fact that the owner had been paying general taxes, once the judge had initially asked about tax payments. The statute requires "a showing by clear and convincing evidence that the tax deed had been procured by fraud or deception by the tax purchaser." (Ill.Rev.Stat.1993, 35 ILCS 205/266 (West 1993).) MidFirst Bank has failed to present evidence which meets this standard.

Fraud implies a wrongful intent--an act calculated to deceive. (Application of County Treasurer of Cook County (1982), 92 Ill.2d 400, 407, 65 Ill.Dec. 905, 442 N.E.2d 216.) However, no deceptive "act" takes place where, as here, the trial court knows as much information as the allegedly deceptive party. All the tax information which the trial court requested was given to the court by Midwest Partnership. The court examined the evidence, found that all taxes had been paid as required under the redemption statute, and awarded the tax deed. The exhibits which MidFirst Bank complains should have been "specifically alerted" were admitted into evidence and relied on by the judge to make his ruling. Moreover, we agree with Midwest Partnership that there was no direct evidence as to who paid the general taxes, but only a payment receipt to be mailed to the taxpayer owner--even MidFirst Bank can state only that the taxes were "apparently" paid by the owner of the residence. (Appellants brief p. 7). "[E]ven if a more persistent effort could have been made in the conduct of the search and inquiry, this is not proof of fraud unless there exists evidence of a wrongful intent or a deceptive design." (Exline v. Weldon (1974), 57 Ill.2d 105, 110, 311 N.E.2d 102.) Midwest could reasonable rely on the...