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City of Bloomington v. John Allan Co.

APRIL 4, 1974.

THE CITY OF BLOOMINGTON, PLAINTIFF-APPELLANT,

v.

THE JOHN ALLAN COMPANY ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of McLean County; the Hon. WENDELL E. OLIVER, Judge, presiding.

MR. JUSTICE SIMKINS DELIVERED THE OPINION OF THE COURT:

This is an appeal by the plaintiff, City of Bloomington, from an order granting defendants' motion to strike and dismiss the plaintiff's suit to foreclose its statutory lien for repairs made on certain real estate and to set aside a tax deed issued to the defendant, The John Allan Company, and a subsequent conveyance of the real estate to defendant, Magdalene P. Schalk; or in the alternative, to grant the city restitution for the reasonable value of the repairs it made on the property.

In October 1966, the McLean County Collector applied to the circuit court for a judgment and order of sale for the non-payment of general real estate taxes on the property in question for the year 1965. Pursuant to that judgment and order of sale, on October 24, 1966, the property was sold to Interstate Bond Company and the county clerk issued tax sale certificate No. 131. A normal redemption period of 2 years would have run to October 24, 1968; however, pursuant to section 263 of the Revenue Act, Interstate Bond Company extended the period of redemption to August 25, 1969. Ill. Rev. Stat., ch. 120, par. 744.

On grounds that the building on the land in question was unsafe, the city filed a complaint pursuant to section 11-31-1 of the Municipal Code on March 28, 1968, seeking a court order authorizing the city to repair the premises and impose a lien upon the property for the cost of repairs. (Ill. Rev. Stat., ch. 24, par. 11-31-1.) On June 7, 1968, the circuit court authorized the city to make the repairs requested and in late 1968 and early 1969 the city made repairs pursuant to the above court order in the amount of $5380.60.

On April 1, 1969, the tax purchaser, Interstate Bond Company, filed a supplemental petition within the county collector's application for judgment and order of sale for non-payment of real estate taxes stating that the extended period of redemption would expire on August 25, 1969, and asking that a tax deed be ordered to issue if no redemption was made by that time. Shortly thereafter Interstate Bond Company served notices as prescribed by sections 263 and 266 of the Revenue Act on all parties with an interest in the property, including the City of Bloomington, which had acquired an interest by virtue of its pending suit for the repair of the property. On August 25, 1969, the period of redemption expired with no redemption having been made. A court hearing was set for August 29, 1969, by virtue of the notice served pursuant to section 266 of the Revenue Act. On the court's own motion the matter was continued to September 10, 1969. On August 28, 1969, section 271.1 of the Revenue Act became effective — providing that no order for the issuance of a tax deed should be entered where any city has an interest by virtue of the police power by advancement from public funds, until the city is reimbursed. On September 8, 1969, the city filed a notice of lien for improvements as authorized by the court. On September 10, 1969, the court entered an order directing issuance of a tax deed to the defendant, The John Allan Company, assignee of Interstate Bond Company, with an order finding "that all notice as required by law has been given and that petitioner, The John Allan Company, has complied with all provisions of law entitling it to a tax deed to said parcel of real estate." The tax deed was issued to The John Allan Company on September 10, 1969. In April 1970 the defendant, Magdalene P. Schalk, purchased the real estate in dispute from the defendant, The John Allan Company.

On August 13, 1972, the city filed a suit in the circuit court seeking in Count I to foreclose its statutory lien and set aside the tax deed and subsequent conveyances, and in Count II seeking restitution for the reasonable value of the repairs made on the premises. On September 27, 1972, the defendants filed a series of motions to strike and dismiss the plaintiff's complaint pursuant to sections 45 and 48 of the Civil Practice Act. The essence of defendant's motions was that the circuit court had acquired jurisdiction of the property in issue by virtue of the county collector's application for judgment and order of sale; thereafter there was a tax sale, and the tax purchaser served proper notices and fulfilled all other requirements prerequisite to the issuance of the tax deed. Finally a tax deed was issued by the court after finding all such requirements had been fulfilled, so that the city's complaint was actually an unauthorized collateral attack on the tax deed. The defendants further point out that the city did not directly appeal from the order to issue the tax deed, and the only other way to attack the tax deed was by section 72 of the Civil Practice Act which provides for a 2-year statute of limitations with the plaintiff's complaint being filed almost 3 years after the tax deed was issued, and further that although not denominated as such, the plaintiff's complaint does not set forth a cause of action under section 72 and that the order entered on September 10, 1969, is res judicata to the issues plaintiff attempts to raise in any event. In addition the defendant, Magdalene P. Schalk, moved to strike and dismiss the complaint of the city on the grounds that she was a bona fide purchaser relying on the tax deed of September 10, 1969, having no connection with The John Allan Company, so that no order could be entered which would interfere with her title. The hearing was held on the defendant's motion to strike and dismiss on November 7, 1972, and on January 12, 1973, the court entered an order sustaining that motion and dismissing the city's complaint.

The essence of plaintiff's complaint and its appeal is that, regardless of what had gone before, on August 28, 1969, section 271.1 of the Revenue Act went into effect providing:

"No order for the issuance of a tax deed under any of the provisions of this Act shall be entered affecting the title to or interest in any land in which a city, village or town shall have an interest under the police and welfare power by advancements made from public funds until the claimant shall make reimbursement to the city, village or town of the money so advanced. However, in lieu of reimbursement, the tax purchaser or his assignee may make application for and the court shall order that the tax sale be set aside as a sale in error." (Ill. Rev. Stat. 1969, ch. 120, par. 752.1.)

Neither Interstate Bond Company, nor the defendant, The John Allan Company, or Magdalene P. Schalk, reimbursed the city for its repair expenses, which gave rise to its lien filed on September 8, 1969, so the city contends that the tax deed issued 2 days later on September 10, 1969, was improperly ordered. Plaintiff contends that the unequivocal language of the above statutory provision makes it irrelevant that the city was authorized to do the work resulting in a lien in June 1968, 20 months after the tax sale, the work completed and the final bill paid by July 1969, well before the period of redemption had run with the lien not filed until September 8, 1969, after the new Act upon which the city relies as requiring its reimbursement had gone into effect.

• 1-3 The plaintiff's most direct attack on the tax deed based on the above reasoning is that the tax deed is simply void for want of jurisdiction of the court to order its issuance without complying with section 271.1 of the Revenue Act. The plaintiff argues that the concept of jurisdiction includes not only the bounds as to persons, actions, and property, but also the particular thing ordered or decreed by the court so that even though the court here had jurisdiction over the property and the parties, the enactment of section 271.1 of the Revenue Act took away the court's jurisdiction to thereafter award tax deeds unless the city was reimbursed for money it expended on the property. It is true while that jurisdiction is not only the power of the court to hear and determine a particular case, but also the power to render the particular judgment entered, and every act of the court beyond its jurisdiction is void. (Thayer v. Village of Downers Grove, 369 Ill. 334, 16 N.E.2d 717.) However, when a court acquires jurisdiction both of the subject matter and parties in a tax foreclosure proceeding, it retains jurisdiction to enter a supplemental decree ordering issuance of a tax deed. (Shapiro v. Hruby, 21 Ill.2d 353, 172 N.E.2d 775.) It is the jurisdiction over the land itself, which is acquired in the original application for judgment and order of sale, that gives the court the power to act. (Cherin v. The R. & C. Co., 11 Ill.2d 447, 143 N.E.2d 235.) That jurisdiction, once acquired, continues through the entire proceedings, including the order to issue the deed. Farlow v. Oliver, 29 Ill.2d 493, 194 N.E.2d 262.

• 4, 5 One of the grounds of defendant's motion to strike and dismiss the city's complaint was that, regardless of the fact that it was instituted as a suit to enforce the city's lien, as well as to set aside the tax deed, it was really a collateral attack on the defendant's tax deed of September 10, 1969, and therefore could only properly be brought under section 72 of the Civil Practice Act. When a tax deed is entered, section 266 of the Revenue Act provides that a new chain of merchantable title is created. (Ill. Rev. Stat., ch. 120, par. 747.) It has been said that a tax deed gives the purchaser a new and independent title, free and clear from all previous titles and claims of every kind and character. (People v. Cottine, 20 Ill. App.2d 562, 156 N.E.2d 774.) "By its enactment of section 266 of the Revenue Act, the legislature intended to render tax titles incontestable except by direct attack, unless the circumstances are such as to warrant the application of section 72 of the Civil Practice Act, or unless the order directing the issuance of deed was utterly void. [Citations.] An order is rendered void, not by reason of mere error or impropriety, but by lack of jurisdiction by the issuing court of either the subject matter or the necessary parties [citation], and we have frequently stated that jurisdiction once acquired in a tax foreclosure action continues through the entire proceeding, including the order for deed." Farlow v. Oliver, 29 Ill.2d 493 at 499.

Section 266 of the Revenue Act provides, "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 72 of the `Civil Practice Act' * * * in the same manner, upon the same grounds and to the same extent as may be had under that Section with respect to final orders, judgments and decrees in other proceedings * * *." (Ill. Rev. Stat., ch. 120, par. 747.) A petition seeking relief under section 72 must be filed in the same proceeding in which the order, judgment or decree was entered, but is not a continuation thereof. (Ill. Rev. Stat., ch. 110, par. 72(2).) Of course the instant case was instituted as a suit to enforce the city's lien and to set aside a tax deed, and in fact, the city was never a party to the proceedings culminating in the issuance of the tax deed to the plaintiff. Although the trial court specifically found that all required notice was given, the city did not appear at any time during the period of redemption, nor did it contest the issuance of the tax deed.

Section 72 requires that a petition seeking relief under it must be filed not later than 2 years after the entry of the order, judgment or decree challenged. (Ill. Rev. Stat., ch. 110, par. 72(3).) However, it also provides that nothing contained therein shall affect any existing right to relief from a void order, judgment or decree, or to employ any existing method to procure that relief (Ill. Rev. Stat., ch. 110, par. 72(7)), and the city contends that, therefore, even if its action should have been brought under section 72 rather than a separate action, the statute of limitations would not apply because the tax deed was void. The city also argues that its suit was not a mere collateral attack on the tax deed, but rather a foreclosure suit brought on its statutory lien created by section 11-31-1 of the Municipal Code which provides for a repair or demolition lien, and a 3-year period in which to bring a foreclosure suit. Ill. Rev. Stat., ch. 24, par. 11-31-1.

The defendant, Magdalene P. Schalk, relies on section 72(5) of the Civil Practice Act which gives added protection to certain third parties who, as bona fide purchasers, have justifiably relied upon the order or decree being attacked. (Ill. Rev. Stat., ch. 110, par. 72(5).) The city contends that this is not applicable here, alleging that the city was not given proper notice of the tax deed proceedings, and that such defect was clear on the face of the record. In Southmoor Bank & Trust Co. v. Willis, 15 Ill.2d 388, 155 N.E.2d 308, a tax deed had been issued pursuant to a court order accompanied by a finding that the petitioner had complied with all provisions entitling it to a tax deed as in the instant case. The former owner filed a suit under section 72 of the Civil Practice Act attacking the deed as void on the grounds that section 247 of the Revenue Act provided that where all prior taxes were not paid, the purchase shall become void and offered ...


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