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The People v. Hess

OPINION FILED NOVEMBER 23, 1955

THE PEOPLE OF THE STATE OF ILLINOIS,

v.

HELEN ROWENA HESS ET AL. — (ULYSSES G. RANGE, SR., APPELLANT,

v.

DAVID S. GOLDSTEIN, APPELLEE.)



APPEAL from the Circuit Court of Lake County; the Hon. BERNARD M. DECKER, Judge, presiding.

MR. JUSTICE DAVIS DELIVERED THE OPINION OF THE COURT:

This is an appeal from an order of the circuit court of Lake County dismissing a petition to declare void a certain purported redemption from tax foreclosure sale, and for the issuance of a tax deed to the real estate pursuant to statute. (Ill. Rev. Stat. 1953, chap. 120, par. 747.) Petitioner claims a freehold is involved giving this court jurisdiction on direct appeal.

Insofar as it is material here, the petition alleged that petitioner was the purchaser of the subject real estate at a tax foreclosure sale; that less than five and more than three months of the period of redemption remained; that no valid redemption of the property had been made; and that the purported redemption of the defendant Goldstein, as owner of all the shares of stock of Stylecraft Apparel Corporation, was void on the following grounds: (1) that Stylecraft fraudulently concealed its ownership of the premises in a bankruptcy proceeding prior to its dissolution; (2) that defendant Goldstein had no interest in the premises, and (3) that he did not own all the shares of Stylecraft at the time of dissolution. The petition prayed that the court find the pretended redemption void and order that, if the premises are not redeemed, petitioner is entitled to a deed. By his answer defendant put in issue all the factual grounds for declaring the purported redemption void.

At the hearing, held subsequent to the expiration of the period of redemption, it was stipulated or clearly proved that the Stylecraft Apparel Corporation was the last record owner of the premises; that Stylecraft went into bankruptcy in 1932; that it did not list the subject real estate as an asset in bankruptcy; that the corporation was dissolved in 1935; and that defendant Goldstein paid in the full amount of the redemption money in due time, purporting to redeem as sole stockholder of the dissolved corporation.

Defendant Goldstein testified that he is the owner of all the stock of Stylecraft; that stock certificates were never made out or issued; that his son, Saul Goldstein, his brother-in-law, Leon Kessie, and one McElwee were the incorporators, but defendant Goldstein supplied all the capital in the form of money and property; that he was running the business and in charge of everything; that he signed the checks and made loans; that he had seen the stock book and there were no entries in it that he knew of; and that he had the three incorporators appointed officers when the corporation was organized. The charter of the corporation shows that the three incorporators each subscribed and paid in $20,000 for shares in the corporation. Goldstein also testified that Kessie and McElwee were dead, and that he had tried to find the books of the corporation for several years but had been unsuccessful.

At the conclusion of defendant's testimony, petitioner moved to strike on the ground that proof of ownership could only be made by the corporate books, and that no sufficient foundation had been laid for secondary evidence of the contents of the corporate records. This motion was denied.

At the conclusion of the hearing, subsequent to the expiration of the period of redemption, the trial court found that defendant Goldstein had duly redeemed the premises and dismissed the petition for want of equity.

Petitioner's theory on this appeal is that defendant has the burden of showing an interest in the real estate entitling him to redeem; that this can be shown only by the books of the corporation; that there is no showing that the books have been lost so as to permit secondary evidence of their contents. Petitioner further contends that the failure to disclose assets in the prior bankruptcy proceedings prevents defendant from now asserting any rights in those assets. Defendant has filed no appearance or brief in this court supporting the decree below.

At the outset we are confronted with a question of our jurisdiction on direct appeal. Petitioner claims a freehold is involved. This court will not take jurisdiction unless a freehold is actually involved, and will consider this question even though not raised by the parties. Johnson v. Sarver, 413 Ill. 626; Streator Federal Savings & Loan Assn. v. Benckendorf, 413 Ill. 280; Jones v. Horrom, 363 Ill. 193.

The rules for determining if a freehold is involved have been so often stated by this court as to become axiomatic, but their application to individual cases has unfortunately been a frequent source of argument before this court. In the interest of clarifying the application of the rule in redemption cases, we feel that the freehold issue here merits consideration. We have often stated that a freehold is involved only where either the necessary result of the judgment or decree is that one party gains and the other loses a freehold estate, or where the title to a freehold is so put in issue by the pleadings that the determination of the case necessarily requires a decision with respect to the ownership of the real estate in controversy. Johnson v. Sarver, 413 Ill. 626; Neale v. Parks, 408 Ill. 212; Horner v. Winnebago County, 396 Ill. 382.

Ordinarily a decree establishing a right of redemption does not involve a freehold since the loss or gain of a freehold would not be the necessary result of the decree but would depend upon the subsequent action or inaction of the party whose right to redeem had been determined. (Ziegler v. Perbix, 380 Ill. 264; Carlson v. Chicago Title and Trust Co. 375 Ill. 125.) But in the case at bar the redemption money had been paid, and a certificate of redemption issued, so that the result of the decree is to deny to the purchaser at the tax sale his right to a freehold. (Illinois National Bank of Springfield v. Gwinn, 390 Ill. 345.) We also pointed out in Klein v. Mangan, 369 Ill. 645, that the interest of the holder of a certificate of purchase is not a freehold interest, but merely the right to receive a deed if the premises are not redeemed. However, it appears that, at the time of the hearing and decree in the trial court, the period of redemption had expired, and no redemption had been made except the purported redemption in issue here. It must necessarily follow that if the purported redemption were void, the petitioner would be immediately entitled to a freehold estate upon his petition. As a result of the posture of the case below, the decree necessarily determined whether petitioner was to gain or lose a freehold. We accordingly hold that this court has jurisdiction of this appeal. Illinois National Bank of Springfield v. Gwinn, 390 Ill. 345.

Turning now to the matters raised upon this appeal, we come to the contention that defendant has failed to meet the burden of showing a right to redeem. Petitioner claims his testimony of stock ownership should be stricken for the reason that it amounted to secondary evidence of the corporate records without a sufficient foundation being laid as to their loss or destruction.

We think it clear that a complete stranger to property is given no right to redeem by either section 5 of article IX of the constitution, or the statute in the instant case. (Ill. Rev. Stat. 1955, chap. 120, par. 734.) However, these constitutional and statutory provisions do not require complete legal title, but only an undefined "interest" in the real estate. The degree of proof necessary to establish such a right of redemption is a novel question, and we are cited to no authority that is decisive in the instant case.

Petitioner does not contend that a shareholder of a dissolved corporation may not redeem property of the late corporation, but contends that defendant has not met the burden of proof in this regard. But he does contend that the relationship of stockholder may be shown only by a certificate of shares or the corporate records, and that all of ...


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