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In Re Application of County Collector





APPEAL from the Circuit Court of Cook County; the Hon. ROBERT J. DEMPSEY, Judge, presiding. MR. JUSTICE DOWNING DELIVERED THE OPINION OF THE COURT:

Rehearing denied December 14, 1978.

The petitioners, Willis T. Howell, Mabel Howell, and Union National Bank of Chicago as trustee under Trust No. 412, filed a petition in the circuit court of Cook County pursuant to section 72 of the Civil Practice Act (Ill. Rev. Stat. 1971, ch. 110, par. 72) to set aside a tax deed issued to the original tax purchaser's assignee, Elsie Lhotka, and her grantees, the Edelens. After an evidentiary hearing, the trial court denied the petition. A motion for reconsideration was also denied. Petitioners appeal from these orders. The trial court also denied respondents' motion for damages under section 41 of the Civil Practice Act. (Ill. Rev. Stat. 1977, ch. 110, par. 41.) It is from this order that respondents cross-appeal.

The issues on appeal are whether a finding of fraud is a necessary element in a collateral proceeding pursuant to a section 72 petition, and if so, whether fraud was proved in this case; and whether respondents' section 41 motion was properly denied.

The real estate taxes accruing for the year 1965 were not paid on the subject property (hereinafter lot 21), and the property was sold to Suburban Tax Lien (Suburban) in February 1967 for $110.63, which represented taxes due plus interest and costs. Suburban subsequently assigned its certificate of purchase to Elsie Lhotka.

On December 8, 1969, after the redemption time had expired, Elsie Lhotka filed an "Application for an Order Directing the County Clerk to Issue Tax Deed." Attached to this application was an affidavit by James W. Haleas, an attorney for Elsie Lhotka, which stated that he inspected the property on August 4, 1969, and found it to be vacant and unimproved, having a frontage of 100 feet and a depth of 160 feet, and that the parties in interest, Edward J. Barrett, county clerk of Cook County, Genevieve Movisian, Union National Bank, Trust No. 412, and First National Bank of Blue Island, Trust No. 132, were served with a copy of the tax sale notice and petition.

At an ex parte hearing on December 30, 1969, Peter E. Haleas, an attorney representing Elsie Lhotka, testified that the property was last inspected by James W. Haleas on August 4, 1969, was found to be located at 13433 Circle Avenue, Alsip, Illinois, was vacant, unimproved, and unoccupied; that James W. Haleas, on July 25, 1969, personally served notice upon J. Russell Brown, a trust officer of Union National Bank, trustee under Trust No. 412, as owner and last assessee of the property; that notice was personally served upon the county clerk and First National Bank of Blue Island, trustee under Trust No. 132; and that taxes for the years 1966, 1967, and 1968 had been paid.

Also on December 30, 1969, the trial court found all notices required by law had been given and directed the issuance of a tax deed to Elsie Lhotka. The deed was issued that same day.

On December 29, 1972, the subject property was sold to Frank and Marilyn Edelen for $10,000. In July 1973, the Howells filed a section 72 petition to vacate the order granting Elsie Lhotka a tax deed. An amended petition was then filed which alleged that the tax deed was procured through fraud in that its issuance was based upon a false affidavit, false testimony, misrepresentations and lack of due diligence by the tax buyer, and that the tax buyer failed to give statutory and constitutional notice of the tax deed proceedings to Howell as occupant of the property. The petition further alleged that the Edelens were not bona fide purchasers of the property.

Both Elsie Lhotka and the Edelens filed motions to dismiss the petition. The trial court denied Elsie Lhotka's motion but granted the motion of the Edelens, finding they were protected as bona fide purchasers. Upon appeal, this court reversed the trial court ruling, granting the Edelens' motion to dismiss the section 72 petition, finding that sufficient allegations were made to establish that the Edelens may not have been bona fide purchasers. (See In re Application of County Treasurer (1st Dist. 1975), 30 Ill. App.3d 235, 332 N.E.2d 557.) The case was then remanded for a hearing on the section 72 petition.

At that hearing Willis T. Howell testified that in 1966 he purchased two vacant lots, lots 20 and 21, which were adjacent to the Howell Airport which he owned and operated. Lot 21 was an irregularly shaped lot with dimensions of 100' by 402.50' by 342.60' by 259.40' by 461.50'. Title in both lots was placed in the Union National Bank of Chicago as trustee under Trust No. 412 of which Willis T. Howell was the sole beneficiary. *fn1 Howell testified that in 1966 he began to improve the property by leveling and grading it, and that this took several years to complete. He stated that he installed airplane tiedowns on the eastern side of lot 21. These tiedowns were metal rods with a loop on the top where a rope was tied and then attached to the plane to keep it from moving; and that the stakes for the tiedowns were driven into the ground so that only three inches of the stake was visible above the ground. An old airplane tire was placed around the top of each tiedown to make them more visible. Howell testified that he rented these tiedowns out to the airport customers from 1967 to 1973, except during the springtime when the ground was too wet for planes to park there. Howell testified that he also used lot 21 as a parking area for two or three helicopters. He further testified that there was a visible pathway coming from his property onto lot 21.

Howell testified that in the spring of 1970, his son told him a man had put up a "For Sale" sign on the property and said he owned the lot; and that he drove out to the property but did not find any sign. In a prior deposition Howell stated that he called his attorney, Will Gierach, regarding the "For Sale" sign, but at the hearing he stated that he did not call Gierach.

Willis E. Howell, Jr. (hereinafter Howell Jr.) testified that he worked for his father at the Howell Airport during the years 1965 to 1973. He testified to the grading and leveling work being done to lot 21 during 1967 to 1969. He stated that on the average three to five planes and one to three in the winter were parked on lot 21 during 1967 to 1973, and that helicopters also parked in approximately the middle of the lot.

Howell Jr. testified that some time during 1970 or 1971, he saw Ben Lejcar putting up a "For Sale" sign on the property; that Lejcar told him that lot 21 was his property and the helicopters would have to be removed, and that he could not drive through there anymore; and that he told his father about this, but when they went to look for the sign it was gone.

Howell Jr. further testified to knowing Frank Edelen in a neighborly way. In 1973, Edelen came to the airport office and told him he owned the property, and that he related to Edelen the "For Sale" sign incident. Edelen told him he had taken the sign down. On another occasion, Edelen asked that the planes be moved off his property.

Jim Robson, one of Howell's customers, testified that he kept his plane parked 100' to 150' south of the airport maintenance shop on numerous occasions, and that there were always other planes parked on the lot. Robson also testified that he frequently saw a helicopter parked to the west of his plane; and that he did not remember a road on the lot, but that there was a path across the property.

Will Gierach, an attorney, testified that in 1966 he represented Howell in the purchase of lots 20 and 21. He learned that the 1965 taxes had not been paid and forwarded the tax bills to Howell; he also learned that one of the lots was still being assessed and taxed on the basis of an improvement which had burned some years before.

Gierach initiated an Objection 1 proceeding which at that time was the procedure to correct an error of fact that had occurred in the assessment of property. Meanwhile, Gierach instructed Howell not to pay the second half of the 1965 taxes on either lot 20 or 21 until Gierach could determine which parcel would be subject to the Objection 1 proceeding. Gierach testified that in November 1967, First National Bank of Blue Island (the former owner of the property) received notice of the tax sale from Suburban. The bank forwarded this notice to Gierach as attorney for the buyer. Upon receipt of this notice, Gierach, in late November 1967, obtained estimates of redemption for both parcels. However, he did not redeem at that time. In January of 1969, postcard notice of the tax sale to Suburban was received by Union National Bank as trustee under Trust No. 412 and forwarded to Gierach.

Gierach testified that on April 3, 1969, he called Suburban at the telephone number shown on the postcard and talked to Ben Lejcar, telling him that he intended to redeem on lot 20 and that an Objection 1 proceeding was pending on lot 21. He said that Lejcar told him that there was still plenty of time left. Later that month Gierach's associate paid taxes on lot 20 and received a certificate of redemption. In July 1969, the Objection 1 order was entered correcting the assessment on lot 21, however, no redemption on that property was ever made.

In August 1969, Gierach stated that he again called Lejcar and informed him that the taxes on lot 20 had been redeemed, and that the Objection 1 proceeding on lot 21 had been successfully completed. He asked Lejcar to check his records to see if anything else was open or if any amount was still owed. Lejcar said he would check and get back to Gierach. Gierach stated that he confirmed this conversation with a letter to Lejcar dated August 28, 1969, a copy of which was sent to Union National Bank as trustee under Trust No. 412.

Gierach further testified that he again phoned Lejcar on November 26, 1969, and asked if Lejcar had checked his records pursuant to prior conversations and the August letter, and whether anything else was open on either lot 20 or 21. Gierach testified that Lejcar answered "no" and said the record had been cleared. A notation to this effect was made on the office copy of the August 28, 1969, letter. Gierach then closed the file and billed Howell for his fee.

Gierach admitted that he never looked at the county clerk's records regarding the tax sale on lot 21 until 1973, even though he had been in the building where the clerk's office is located twice a week during 1969-1970. He stated that he relied on Lejcar's representations. Gierach testified that he personally knew Lejcar, having met him at a zoning hearing, and that their work had brought them together in the past. Lejcar's attorney, Mr. Haleas, and Roy Stauber, another attorney, testified they were present at that zoning hearing, but that Lejcar was not there.

Lavinia Trimble, Gierach's secretary for the past 16 years, testified that on April 4, 1969, she took a phone message from Suburban, typed it, but left off the date. When this message was introduced into evidence it was noticed the date of April 4, 1969, had been written in. Trimble testified that the attorney who received the note probably wrote in the date when he received the message on that day. Trimble also testified to typing a letter dated August 28, 1969, to Suburban. Two copies of the letter were made and the original sent to Suburban. One copy was sent to Union National Bank, which copy was introduced into evidence, and the other copy was placed in the office files. However, at the time of this hearing, the office copy could not be found. Instead a verifax copy ...

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