Appeal from the Appellate Court for the First District; heard
in that court on appeal from the Circuit Court of Cook County,
the Hon. Cornelius J. Collins, Judge, presiding.
JUSTICE UNDERWOOD DELIVERED THE OPINION OF THE COURT:
Petitioner, Central National Bank, brought an action in the circuit court of Cook County under section 72 of the Civil Practice Act (Ill. Rev. Stat. 1979, ch. 110, par. 72) seeking to overturn a tax deed issued to respondent, Jocelyn Congua, to property to which petitioner had held legal title under a land trust. The circuit court granted petitioner's motion for summary judgment and ordered that the deed be vacated. A divided appellate court reversed (100 Ill. App.3d 534), and we granted leave to appeal. The principal issue is whether negligence by the sheriff in serving notice of the tax-deed proceedings, as a result of which petitioner was not personally served, entitles petitioner to section 72 relief.
Under section 263 of the Revenue Act of 1939 (Ill. Rev. Stat. 1977, ch. 120, par. 744) the purchaser at a tax sale must give notice of the sale and of the date of expiration of the redemption period not less than three months nor more than five months prior to the expiration of the redemption period. Section 263 requires that notice be served personally and by certified mail, return receipt requested, through the clerk of the circuit court. Unknown owners and interested parties may be given notice by publication. Prior to 1976, the tax purchaser was responsible for personally serving the property owner. In 1976, section 263 was amended to provide that "[t]he purchaser or assignee shall give the above notice by causing it to be served by a sheriff * * *." Ill. Rev. Stat. 1977, ch. 120, par. 744.
The circuit court in the tax-deed proceedings approved the method of personal service by the sheriff's office rather than by the tax purchaser, although the tax sale occurred prior to the effective date of the 1976 amendment. On appeal from the circuit court's decision on the section 72 petition, the appellate court held that although the 1976 amendment should not have been applied, the fact that the parties did not argue the issue and that the circuit court approved of the method of service bound the appellate court. (100 Ill. App.3d 534, 538; relying on In re Application of County Treasurer (1974), 20 Ill. App.3d 291.) Since the issue is not raised here we express no opinion upon it.
The property in question is a vacant lot in Cook County. It was sold to Interstate Bond Company in December 1975 for nonpayment of 1974 taxes. Central National Bank was the legal titleholder of the property under a land trust. Interstate Bond, after extending the redemption period to November 1978, filed its petition for deed in June 1978 and gave notice in July 1978, pursuant to section 263 of the Revenue Act. Notice was published on three consecutive days in the Chicago Law Bulletin; a copy of the notice was given to the circuit clerk, along with postage for certified mail, to be mailed by the clerk; and a copy was delivered to the sheriff's office, to be personally served upon Central National Bank. Prior to the hearing, Interstate Bond assigned its interest to Jocelyn Congua, the respondent here, who was substituted as petitioner for the tax deed.
At the hearing, Jocelyn Congua submitted an affidavit by an agent of Interstate Bond Company in which the affiant stated, inter alia, that he had caused the sheriff to serve notice upon Central National Bank. The court was shown a copy of the published notice, a return receipt signed by petitioner, dated July 26, 1978, for a copy of the notice sent by the circuit clerk, and the sheriff's return, signed by Deputy Joseph Nodell, indicating that Central National Bank was personally served by the deputy at Central National Bank on July 12, 1978, service being made on "E. Sodergren," also spelled "E. Rodergren." The court found, pursuant to section 266 of the Revenue Act, that the notices required by law had been given, that the respondent had acted with diligence in attempting to serve the proper parties, and that the other requirements of the Act had been met. On November 15, 1978, the court ordered that the deed be issued.
On December 13, 1979, Central National Bank filed a petition under section 72 seeking to overturn the tax deed. It alleged that it had not had notice of the tax-deed proceedings and had learned of them in October 1979 through the beneficiary of the trust. It also alleged that it had no employee by the name of "E. Sodergren" or "E. Rodergren" and that this name was fraudulently written on the sheriff's return in order to avoid the statutory requirement of personal service. Subsequently, Deputy Joseph Nodell was deposed, and he testified that the notice which was supposed to be served on Central National Bank had gotten mixed up with some other papers and was mistakenly served upon Miss Sodergren, who worked at the Federal National Mortgage Association, where he had also served papers that day. Petitioner then filed a motion for summary judgment, again stating that it did not have notice of the proceedings, that the deputy's return and the respondent's affidavit which relied on it were false, and that the error in service was a "mistake * * * made because of a mix-up in * * * papers."
The circuit court vacated the order to issue the tax deed and declared the deed issued to Jocelyn Congua null and void. The court held that the combination of the deputy's error and the affiant's reliance on the return, which resulted in his statement that he had caused the sheriff to serve Central National Bank, was "tantamount to fraud." The appellate court reversed, holding that neither the deputy's error nor respondent's reliance upon the return constituted fraud. That court also noted that since petitioner had actual notice of the proceeding in July 1978, as evinced by the return receipt, petitioner had not exercised due diligence in filing the section 72 petition nearly 17 months later.
The petitioner does not attempt to argue here that the deputy's error or the respondent's reliance upon it constitutes fraud as it has been defined by this court: "a wrongful intent — an act calculated to deceive." (Dahlke v. Hawthorne, Lane & Co. (1966), 36 Ill.2d 241, 245; see also Smith v. D.R.G., Inc. (1976), 63 Ill.2d 31; Exline v. Weldon (1974), 57 Ill.2d 105; Zeve v. Levy (1967), 37 Ill.2d 404.) We agree with petitioner's assessment, for there is no evidence of intentional deception on the part of either the deputy or the respondent. Petitioner asserts, however, that applying this strict definition of fraud here would tend to favor the merchantability of tax deeds over the equally important, albeit competing, goal of protecting the landowner accomplished by insistence upon strict compliance with the statutory conditions. "There is little doubt," says petitioner, "that a purchaser who failed to effect personal service, but who nevertheless filed an affidavit indicating to the court that such service had been made, would have perpetrated such deception and fraud upon the court that any order directing the issuance of a tax deed would be subject to attack on those grounds." The decisions of this court, however, do not support this statement. Without proof of fraud, proof that the owner did not actually receive notice, even if a statement had been made to the court that service was made, is not sufficient grounds to grant section 72 relief. (Smith v. D.R.G., Inc. (1976), 63 Ill.2d 31, 37; Zeve v. Levy (1967), 37 Ill.2d 404, 409-10; Urban v. Lois, Inc. (1963), 29 Ill.2d 542, 548.) Nor do we believe that a policy of favoring the validity of tax deeds in a collateral proceeding in any way undermines the trial court's obligation to insist upon strict compliance with the statutory requirements. This was the balance struck by the legislature in the 1951 revision of the Revenue Act of 1939 and repeatedly confirmed by decisions of this court.
Prior to 1951, increasing tax delinquencies were imperiling essential governmental functions. (Cherin v. R. & C. Co. (1957), 11 Ill.2d 447, 452; People v. Muscarello (1953), 350 Ill. App. 88, 92.) In part this was due to the vulnerability of tax deeds, which, in the words of one commentator, amounted to little more than a cloud on the title of the delinquent owner. (Turano, Equitable Relief, Collateral Attack and the Illinois Tax Deed, 51 Chi.-Kent L. Rev. 725 (1975).) In order to return the properties to the tax rolls and to provide greater stability for tax deeds, the legislature substantially revised the Revenue Act in 1951. (See Waldron, Merchantable Title by Tax Deeds, 44 Chi. Bar Rec. 67 (1962); Note, 40 Chi.-Kent L. Rev. 155, 157 (1963).) Section 266 of the Act was amended to provide that the circuit court, rather than the county clerk, would determine whether the tax purchaser was entitled to the deed. (See Cherin v. R. & C. Co. (1957), 11 Ill.2d 447, 451-53.) It also provided that tax deeds would be "incontestable" except by direct appeal or as provided under section 72 of the Civil Practice Act and that the Act "be liberally construed so that tax deeds * * * shall convey merchantable title." Ill. Rev. Stat. 1951, ch. 120, par. 747.
Subsequently this court upheld the validity of tax-deed proceedings in varying circumstances. In Southmoor Bank & Trust Co. v. Willis (1958), 15 Ill.2d 388, the court denied section 72 relief where it was agreed that delinquent taxes had in fact not been paid by the tax purchaser, but the court in the tax-deed proceeding had found that the tax purchaser had complied with all the provisions at law entitling it to a tax deed. This court held that section 72 "cannot be used to again put in issue questions previously adjudicated by valid means." (15 Ill.2d 388, 395.) In Remer v. Interstate Bond Co. (1961), 21 Ill.2d 504, the court held that, while findings of record were conclusive, the section 72 petitioner was entitled to a hearing on allegations of fraud, since those issues had not been asserted earlier. (21 Ill.2d 504, 513-14.) In Urban v. Lois, Inc. (1963), 29 Ill.2d 542, this court held that even though petitioner had not been personally served with notice, where no fraud was shown, the trial court's previous finding that all notice required by law had been given could not be collaterally attacked. (29 Ill.2d 542, 548-50.) In Dahlke v. Hawthorne, Lane & Co. (1966), 36 Ill.2d 241, the court noted that fraud implies "a wrongful intent — an act calculated to deceive" (36 Ill.2d 241, 245) and was not established despite the fact that not all of the occupants of the property had been served with notice. In Zeve v. Levy (1967), 37 Ill.2d 404, this court pointed out:
"[P]petitioner's failure to receive notice of the tax-deed proceeding does not, per se, entitle her to have the deed set aside. (Dahlke.) Nor does the fact that respondent's agent could have made more thorough inquiry and a more diligent search than he did necessarily establish fraud on the part of respondent in the absence of ...