Urban v. Lois, Inc.

• Decision Date: 26 November 1963
• Docket Number: No. 37939,37939
• Parties: S. URBAN Jr., Appellee, v. LOIS, INC., Appellant.
• Court: Illinois Supreme Court

Page 294

194 N.E.2d 294

29 Ill.2d 542

S. URBAN Jr., Appellee, v. LOIS, INC., Appellant.

No. 37939.

Supreme Court of Illinois.

Nov. 26, 1963.

Allan L. Blair, Chicago (Bruce M. Buyer, Chicago, of counsel), for appellant.

Allen S. Pierce and Morris Goldman, Chicago, for appellee.

The Taxpayers Federation of Illinois, of Springfield (Maurice W. Scott, Springfield, of counsel), amicus curiae.

KLINGBIEL, Chief Justice.

This is a proceeding pursuant to section 72 of the Civil Practice Act, Ill.Rev.Stat.1961, c. 110, § 72, to set aside two tax deeds brought by S. Urban, Jr., a mortgagee, against Lois, Inc., the holder of the tax deeds. The county court of Cook County set aside the tax deeds on the ground that Urban had not been personally served with notice of the petition for tax deeds. From this order the respondent, Lois, Inc., appeals directly to this court.

This appeal involves importatn questions relating to the scope of section 72 in taxdeed proceedings. This case was commenced upon the county collector's application for judgment and order of sale for 1958 delinquent general real-estate taxes. On July 7, 1960, pursuant to the judgment and order of sale of the county court, the subject property, which was owned by John and Melba Jones, was sold in two separate parcels to respondent's predecessor in title, Interstate Bond Company, for unpaid 1958 general real-estate taxes and certificates of purchase issued therefor. Normally, the two-year period of redemption from the above tax sale would expire two years from the date of sale or on July 7, 1962. The period of redemption, however, was extended to November 15, 1962, pursuant to section 263 of the Revenue Act (Ill.Rev.Stat.1961, chap. 120, par. 744) which authorizes the holder of the certificate of purchase to extend the period of redemption.

Because the property in question is registered under the Torrens system, sworn copies of the certificates of purchase were filed as memorials on the Torrens register, and all parties in interest were given notice thereof on June 20, 1961. In April, 1962, the owners of the property went to S. Urban, Jr., a real-estate broker, petitioner-mortgagee herein, and sought to borrow $2,000 to pay off debts, including delinquent taxes on their property. They brought in bills and tax bills that had to be paid and Urban agreed to pay them with the proceeds of the mortgage.

On April 14, 1962, the Joneses executed a $2,000 bearer installment note providing for interest at 6 1/2% and payments of $60 a month, which note was secured by a trust deed to the real estate. The mortgage (trust deed) was filed with the registrar of titles on April 16, 1962.

On May 5, 1962, Urban ordered a tax search from the Torrens office and on May 24, 1962, received estimates of cost of redemption from the county clerk which showed that the property had been sold on July 7, 1960, to Interstate Bond Company, and which stated that the time allowed for redemption is two years from the date of sale.

On July 26, 1962, Urban gave the Joneses a closing statement on the $2,000 loan which showed pay-outs in the amount of $2,246.64, and an additional amount of $246.64 due to Urban. The statement included the sum of $1,171.23 for 'tax bills to date,' which admittedly have never been paid.

On June 18 1962, prior to the issuance of Urban's closing statement, Interstate Bond Company, the original tax purchaser, filed petitions in the county court for orders directing issuance of tax deeds to the subject property. Pursuant to statute (Ill.Rev.Stat.1961, chap. 120, par. 747) the petitions were filed as supplemental proceedings within the county collector's application for judgment and order of sale for delinquent 1958 taxes.

Thereafter, on October 19, 1962, Urban's attorney sent a letter to the mortgagors, the Joneses, telling them that he was arranging to clear up the real-estate tax lien of Interstate Bond Company.

Subsequently, petitioner-mortgagee made inquiry to Interstate Bond Company as to the amount of the redemption price and on October 23, 1962, mailed Interstate a bank draft on his escrow bank account to redeem from the tax sales in question. After receipt of this check, Interstate phoned the mortgagee to let him know that the amount was insufficient to redeem from both tax sales which affected the property subject to his mortgage, and on November 1, 1962, he sent Interstate an additional check on his escrow account.

On November 6 Interstate deposited both checks for collection, but they were returned uncollected bearing the notation 'nonsufficient funds'. No further attempts at redemption were made by petitioner-mortgagee, and thereafter, on November 26, Interstate sold and assigend its certificates to respondent, who substituted in Interstate's place in the tax-deed proceeding.

On December 3, 1962, the county court entered orders finding that all notices required by law had been given and that respondent was entitled to tax deeds to the property in question. Although the time for appeal from the orders of December 3 1962, had not yet expired, the mortgagee filed his petition pursuant to section 72 of the Civil Practice Act to set aside the tax deeds on January 14, 1963, claiming that he was not personally served with notice of the tax sales in question. No fraud was charged in this petition. Thereafter, on March 21, 1963, petitioner-mortgagee filed an amended petition charging Lois, Inc. with fraud in the produrement of the tax deeds.

After a hearing on the merits, the trial court expressly found that no fraud had been perpetrated by respondent in the procurement of the tax deeds or at any other time in the tax-deed proceeding. However, the trial court set the tax deeds aside on the grounds that S. Urban, Jr., the mortgagee, had not been personally served with notice. It is this ordr which forms the basis of the present appeal.

The respondent Lois, Inc., insists that the trial court had jurisdiction to issue the tax deeds in question, and that such deeds were incontestable except by direct attack unless grounds exist for the application of section 72. Since the trial court found no fraud existed, Lois, Inc., claims section 72 is inapplicable. Respondent also argues that Urban is bound by the doctrine of lis pendens, and that his conduct bars him from equitable relief.

Urban, however, contends that the tax deeds were totally void and the county court was without jurisdiction to order their issuance. He therefore claims that section 72 is an appropriate remedy to set the tax deeds aside.

We turn first to the basic question of jurisdiction and the office of section 72. We think it clear that the entire tax-sale proceeding is one in rem rather than in personam. (People ex rel. Astle v. Chicago and Eastern Illinois Railway Co. 315 Ill. 536, 539, 146 N.E. 440; People ex rel. Thaxton v. Coal Belt Electric Railway Co., 311 Ill. 29, 33, 142 N.E. 495.) It is the jurisdiction over the land itself, acquired in the original application for judgment and order of sale that gives to the county court the power to act. (Shapiro v. Hruby, 21 Ill.2d 353, 358, 172 N.E.2d 775; Cherin v. R. & C. Company, 11 Ill.2d 447, 454, 143 N.E.2d 235.) Once acquired the county court retains jurisdiction to make all necessary findings and enter all necessary orders supplemental to the original tax sale. We, therefore, hold that the county court had jurisdiction to enter its order of December 3, 1962, finding all notices required by law had been given and directing the issuance of tax deeds to Lois, Inc. (Cherin v. R. & C. Company, 11 Ill.2d 447, 143 N.E.2d 235; People v. Altman, 9 Ill.2d 277, 137 N.E.2d 357.) Such order could thereafter be attacked only by direct appeal or by appropriate proceedings under section 72 of the Civil Practice Act.

Our holding in People v. National Builder's Bank of Chicago, 10 Ill.2d 121, 139 N.E.2d 262, cited by Urban, is consistent with this conclusion. In that case we upheld the issuance of the tax deed, but held that the failure to serve notice on an interested party pursuant to the provisions of the Torrens Act (Ill.Rev.Stat.1953, chap. 30, par. 120) deprived the court of jurisdiction to order the issuance of a new Torrens owner's certificate of title under the special provisions of that act. We made it clear in that case, and in its sequel, People v. National Builders Bank of Chicago, 12 Ill.2d 473, 147 N.E.2d 42, that our decision did not affect the validity of the tax deed.

Despite the fact that the trial court did have jurisdiction to order the issuance of tax deeds in this case, it does not follow that the order is immune from attack after 30 days. However such attack is limited to one for proper grounds under section 72. (Southmoor Bank and Trust Co. v. Willis, 15 Ill.2d 388, 394, 155 N.E.2d 308). In Remer v. Interstate Bond Co., 21 Ill.2d 504...