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People Ex Rel. Scott v. Children's Home





APPEAL from the Circuit Court of Cook County; the Hon. REGINALD J. HOLZER, Judge, presiding.


Rehearing denied May 19, 1981.

This case arises out of a dispute regarding the propriety of an order entered on January 9, 1976, by Cook County Circuit Court Judge Samuel B. Epstein authorizing the conveyance of property owned by a dissolved not-for-profit corporation to the Chicago Park District. As the holder of a tax certificate of sale issued on June 10, 1976, Dorothy Ware, on May 29, 1979, filed a petition in the trial court to intervene for the purpose of presenting a petition attacking as void Judge Epstein's order of January 9, 1976. The Attorney General's office and the Chicago Park District moved to dismiss Ware's petitions. Judge Holzer denied both petitions, and Ware now appeals, presenting the following issues for our review: (1) whether Ware should have been allowed to intervene in the proceedings before Judge Holzer; and (2) whether Judge Epstein's order authorizing a conveyance of the property was void. For the reasons hereinafter set forth we affirm the trial court's order denying Ware's petition to intervene.

The property which is the subject of this litigation is the parcel of land commonly known as 5017 South Ellis Avenue in the city of Chicago. In 1947 the Loeb family, by quitclaim deed, conveyed the property to the Illinois Protestant Children's Home, Inc. (the Home) "for consideration of the sum of $10 and other good and valuable consideration." The Home was a charitable corporation whose stated purpose was to provide a residence for dependent Protestant children. On July 3, 1967, the Home by its president, Florence J. Budd, and its secretary, Nina Ely, conveyed the property to Mrs. Budd. She, in turn, transferred the property to "Flobudd Antiques, Inc." on July 14, 1967. On the same day "Flobudd" through its president, Mrs. Budd, and its secretary, executed a trust deed to Chicago Title & Trust to secure a note for $50,000 to the Gibraltar Corporation. As a result of these transactions the Illinois Attorney General's Office brought a three-count complaint against the Home on April 2, 1970, alleging that the Home was operating in violation of the Charitable Trust Act (Ill. Rev. Stat. 1969, ch. 14, par. 51 et seq.), the charitable solicitations act (Ill. Rev. Stat. 1969, ch. 23, par. 5101 et seq.) and the General Not For Profit Corporation Act (Ill. Rev. Stat. 1969, ch. 32, par. 163a et seq.).

The relief requested by the Attorney General included, inter alia, revocation of the Home's corporate charter; setting aside the conveyances of the property and an accounting of the proceeds therefrom; the appointment of a receiver to seize and liquidate the assets of the Home; and a distribution of the assets, including the property to "other organizations engaged in activities substantially similar to the stated purpose of the said Home, according to the doctrine of cy pres as the Court may direct."

In a decree entered March 29, 1972, Judge Epstein set aside the quitclaim, warranty and trust deeds of July 1967 and ordered Mrs. Budd and "Flobudd Antiques, Inc." to reconvey their respective claims and interests in the property to the Home. Mrs. Budd was also ordered to discharge the mortgage indebtedness. Because many of the Home's records were destroyed in a fire in 1970, the Attorney General's request for an accounting of proceeds and contributions was denied. The court reserved the matters of the disposition of the property of the Home and the dissolution of its corporate charter. In an independent suit brought by the Attorney General's office, however, Judge Covelli dissolved the Home's charter on November 16, 1972, for failure to file the annual reports required by the "General Not For Profit Corporation Act."

Mrs. Budd never complied with the orders entered on March 29, 1972. Judge Epstein therefore ordered a sheriff's deed to be executed by July 31, 1973, conveying the property back to the Home. Both before and after this deed was recorded, Judge Epstein attempted to find a suitable charity to accept the property. On December 29, 1975, the Chicago Park District petitioned Judge Epstein to convey the property to the Park District and to enjoin the city of Chicago from proceeding with an action to foreclose on a $4,500 demolition lien it had acquired in 1972. *fn1

On January 9, 1976, Judge Epstein authorized the Park District to accept conveyance of the land and ordered the sheriff of Cook County to execute and deliver to the Chicago Park District a deed in fee simple for the property. In paragraph 8 of the decree Judge Epstein found that there was "no just reason for delaying enforcement or appeal of this decree." For reasons which are not apparent from the record, a sheriff's deed conveying this land was not executed and delivered to the Park District until October 13, 1978.

On June 10, 1976, six months after Judge Epstein ordered the conveyance, Phoenix Realty, Dorothy Ware's assignor, obtained a tax delinquency certificate of purchase for the property located at 5017 South Ellis. Phoenix bid $201 for $43,468.23 in delinquent taxes assessed for the years 1947-1949 and 1966-1974. Phoenix assigned its interest in the certificate to Ware on August 19, 1976.

On October 21, 1977, Ware, as a holder of a tax certificate of sale, petitioned Judge Dempsey of the tax division to appoint her receiver to prevent waste to the property. Notice of this petition was served on the Chicago Park District which appeared through its attorney, Leslie Liss, before Judge Dempsey on October 27, 1977. Liss represented to the court that the Park District was not interested in the subject property, whereupon the court granted Ware's petition. Late in 1977 the city of Chicago tried to foreclose on its demolition lien and scheduled a sale of the property for November 16, 1977. Ware offered to pay the city the sum of the lien and thereby redeem the property from the foreclosure decree, but the city refused to accept her payment. Ware then obtained an emergency ex parte order restraining the city from proceeding with the sale. The order provided that the sale, if held, would not affect the rights of the certificate holder. Although the order was entered before the sale was scheduled to take place, a copy of the order was not served until after a sale had taken place. On May 15, 1978, Judge Wosik set the sale aside. The sale was "held for naught" and "all parties hereto be put in status quo as of November 14, 1977." The city was ordered to accept Ware's payment of the lien. Three days after this order was entered, Ware paid the corporation counsel's office $6,070.28 for release of the city's levy.

On June 7, 1978, Ware filed a petition for a tax deed and had notices served on all known interested parties. The Chicago Park District was not served. The redemption period for the property expired on September 29, 1978, and four days later Ware appeared before Judge Dempsey for an order directing issuance of a tax deed. The case was continued from time to time until it came before Judge Staniec on October 17, 1978. On that date Mr. Liss from the Park District appeared and requested leave to intervene as an interested party. Liss presented the sheriff's deed, dated October 13, 1978, and stated that the Park District had never received notice of Ware's petition for a tax deed. Ware contended that the Park District was not entitled to notice as a known interested party because of Liss' previous representations to Judge Dempsey when Ware's petition for a receivership was being considered.

A hearing was held before Judge Dempsey on November 28, 1978, at which both Mr. Cook, Ware's counsel, and Mr. Liss testified. Ware also filed a memorandum of law in support of her position that Judge Epstein's decree of January 9, 1976, did not, in and of itself, pass title to the Chicago Park District, that the decree was void and that the Park District had waived and was estopped from raising the defense of lack of notice to an interested known party to Ware's petition for a tax deed.

On April 20, 1979, Judge Dempsey found that Judge Epstein's decree "by its own terms required a conveyance of the premises to be made and authorized acceptance of the conveyance; that the decree did not purport to vest and did not vest title to the premises in the Chicago Park District"; and that "the Sheriff's Deed called for by the decree was not executed until October 13, 1978, on which date it was delivered to and accepted by the Chicago Park District; the Park District became owner of the premises on October 13, 1978, subsequent to the expiration of the period of recemption." Although Judge Dempsey criticized the conduct of the attorneys of the Chicago Park District, he found that their conduct was "not sufficient as a matter of law to constitute a waiver by the Chicago Park District of its rights in the premises in question and of its rights [as a known interested party] to notice [of the petition for a tax deed] under the Constitution and statutes." Ware "had actual knowledge of the interest of the Chicago Park District by reason of the letter of opinion attached to its application for a tax deed and had a convenient means of verifying the true facts as to its continuing interest by inquiry of the Commissioners or other officers of the District." For that reason Ware should have served the Park District with notice of her petition for a tax deed. Judge Dempsey found that the facts did not warrant the application of the doctrine of estoppel against the Park District.

With respect to Ware's claim that Judge Epstein's decree was void, Judge Dempsey ruled that "whether the decree represented a proper application of the doctrine of cy pres is not subject to collateral attack in this proceeding as the Chancery Court clearly had jurisdiction of the subject matter and the parties and the decree was not appealed." Judge Dempsey ordered the Park District to reimburse Ware for moneys she expended at the tax sale ...

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