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Schwartz v. City of Chicago

JULY 3, 1974.




APPEAL from the Circuit Court of Cook County; the Hon. JOSEPH M. WOSIK, Judge, presiding.


The plaintiffs, co-partners doing business as Thornton, Ltd., brought suit against the City of Chicago charging negligent failure to notify them of a demolition suit affecting certain real estate for which Thornton held a tax-sale certificate. They appeal from the order entered in favor of the City at the close of their case.

Thornton contends that: (1) the City owed a statutorily-imposed duty to name it a party to the demolition suit; (2) as certificate holder, it possessed vested rights either to reimbursement of the tax sale price plus penalty interest or to a tax deed on expiration of the redemption period and that the City's breach of duty entitled it to damages for loss of its anticipated gain; and (3) the petition it filed to vacate the tax sale in exchange for a refund of its purchase price represented only an effort to mitigate damages. The City responds that its failure after diligent search to make Thornton a party to the suit did not render it liable to the certificate holder, and that Thornton's refund for and cancellation of the tax certificate of purchase released all its claims.

Thornton purchased the certificate for $6,184.94 on October 31, 1966, at a sale for the delinquent general taxes on a 12-apartment building situated on two lots. At the time of the purchase a partner in Thornton estimated the value of the property to be $30,000, based on capitalization of the income stream, with allowance made for $4,800 to $5,800 for the repairs which he estimated were necessary to bring the building into compliance with the municipal housing code.

Four months after the sale, on March 3, 1967, the City instituted a demolition suit against the same property. In August 1967, on motion of the City, a receiver was appointed for the limited purpose of seeing whether the building could be brought into compliance with the housing code. Orders were subsequently entered to vacate the premises and to repair them. When the owners of record did not comply with the latter order, a decree was entered in June 17, 1968, directing the elimination of the alleged public menace. The building was demolished some time between October 17 and November 23, 1968.

Thornton claims not to have learned of these events until after the demolition had taken place. The evidence, however, contradicts this assertion. Through its partner Stanford Marks, Thornton admitted at the trial that it failed to inspect the premises from the time of the tax sale in October 1966 until shortly after the receipt in August 1968 of a report of title listing the City's demolition suit. Thornton had requested the report preliminary to preparing a petition for a tax deed on the property. When Marks viewed the building in late August or early September 1968 he found it abandoned and extensively vandalized. Judging the building incapable of economic restoration, Thornton decided not to petition for a tax deed. Instead, it filed this action, charging the City with negligent failure to serve notice of the demolition suit, as required by section 253a of the Revenue Act of 1939 (Ill. Rev. Stat., 1965, ch. 120, par. 734a), and seeking damages measured by either the difference between the market value of the property at the time the tax certificate was purchased and after the improvement was razed or, alternatively, the amount which a redeeming titleholder would have been charged in October 1968. It also petitioned for and was granted a vacation of the original tax sale, receiving a refund of the sale price in exchange for the surrender and cancellation of the certificate.

• 1 In order to evaluate the parties' claims on the matter of liability, it is first necessary to determine whether and to what extent the City had a duty to notify Thornton. That some such duty existed is beyond argument. Section 253a requires that tax certificate holders be named parties to demolition actions affecting property represented by their certificates. In view of this prescription, and keeping in mind general jurisdictional tenets, it would seem that unless a certificate holder was in privity with one of the parties actually notified in a demolition action, failure to notify that holder of the action would make any decree against him void. Section 253a, however, must be read in conjunction with that portion of the revised Cities and Villages Act which governs demolition proceedings, particularly with that part of section 11-31-1 (Ill. Rev. Stat. 1967, ch. 24, par. 11-31-1) which provides:

"Where, upon diligent search, the identity or whereabouts of the owner or owners of any such building shall not be ascertainable, notice mailed to the person or persons in whose name such real estate was last assessed shall constitute sufficient notice under this section." (Ill. Rev. Stat. 1967, ch. 24, par. 11-31-1.)

Service by publication is considered adequate substitute for the written notice specified in section 11-31-1. City of Chicago v. Leakas (1972), 6 Ill. App.3d 20, 284 N.E.2d 449; City of Chicago v. Logan (1965), 56 Ill. App.2d 291, 205 N.E.2d 795.

We do not perceive an irreconcilable conflict between the notice provisions of the Revenue Act and the Cities and Villages Act. The one specifies a party necessary to demolition actions, the other describes a proper mode of notifying necessary parties. Laws must be interpreted consistently with one another where possible, and statutes should be construed with other statutes touching the same subject as part of a coherent system of legislation. (Klemme v. Drainage District No. 5 (1942), 380 Ill. 221, 43 N.E.2d 966.) Reconciliation of the two provisions is supported by comparison of the policies behind the respective legislative schemes. The tax sale provisions of the Revenue Act were drawn with the object of procuring revenue. The various protective provisions of the Revenue Act toward tax purchasers have the object of inducing prudent persons to bid at tax sales. The State has both a general interest in keeping titles free from clouds and a special interest in encouraging persons to provide governmental units with the revenue they would not have received because of tax delinquencies. Ancillary to this is a purpose to keep rental units viable where possible, if legal owners have, as is often the case, abandoned the properties. City of Chicago v. Logan (1965), 56 Ill. App.2d 291, 205 N.E.2d 795.

Against these desiderata must be weighed the interest in the public health, safety and welfare which is served by the relevant portions of the Cities and Villages Act. Section 11-31-1 reflects the pressing need to free the community from menaces to its well-being. In a metropolis the size of Chicago, the authorities are annually confronted with hundreds of hazardous and abandoned properties. The interests of public safety necessitate a more summary kind of procedure and a lesser standard of notice to interested parties, particularly those who make themselves difficult to find. But while the policy behind summary approaches to the demolition of dangerous and unsafe buildings is perhaps more imperative than the interest in protecting tax titles as an inducement to tax purchasing and the production of revenue, it in no way dictates abandonment of the latter aim.

Tax purchasers are far from helpless if they wish to supervise their investments during the interim between a tax sale and expiration of the redemption period. In addition to that portion upon which Thornton relies, section 253a further provides:

"After any sale of real property for failure to pay taxes upon such property and until a tax deed has been issued or until redemption has been made, no waste shall be committed on any of the premises involved. The court in which the order was entered directing such property to be sold to satisfy the taxes, interest, penalties and costs may, upon verified petition of the holder of the certificate of purchase, take such action as the court deems necessary and desirable to prevent the commission of waste.

* * * Nothing herein contained is intended to prevent a court from appointing the holder of the certificate of purchase as receiver." (Ill. ...

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