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City of Chicago v. Central National Bank

OPINION FILED JUNE 3, 1985.

THE CITY OF CHICAGO, PLAINTIFF,

v.

CENTRAL NATIONAL BANK, TRUSTEE, ET AL., DEFENDANTS AND THIRD-PARTY PLAINTIFFS-APPELLANTS, (ROBERT P. HEFFERNAN, THIRD-PARTY DEFENDANT-APPELLEE).



Appeal from the Circuit Court of Cook County; the Hon. Albert Green, Judge, presiding.

JUSTICE BUCKLEY DELIVERED THE OPINION OF THE COURT:

The present appeal arises out of a foreclosure suit brought by the city of Chicago on property owned by the third-party plaintiffs and a subsequent purchase at a judicial sale to the third-party defendant, Robert P. Heffernan. This case has come before us on a prior occasion and was disposed of in an unpublished decision pursuant to Supreme Court Rule 23 (87 Ill.2d R. 23). The facts as set forth in our prior decision are as follows.

On April 26, 1978, the city of Chicago filed a complaint to foreclose a demolition lien on property held in trust. Although an appearance was filed on behalf of the trustee, Central National Bank, and the beneficiaries of the trust (bank), no answer was ever filed. As a result of the bank's failure to plead, a default judgment of foreclosure was entered in favor of the city on March 7, 1979, and the sale of the property was ordered to satisfy the outstanding lien. On May 30, 1979, Robert Heffernan purchased the property at a sheriff's sale for $10,701.93. An order confirming the sale was entered on July 20, 1979, by the same judge that had entered the initial judgment of foreclosure. The order explicitly stated that the sheriff had conducted the sale in accordance with the law and the terms of the judgment of foreclosure and that the proceedings in connection with the sale were in all respects regular and proper.

On April 30, 1980, the bank filed a section 72 petition to vacate the judgment of foreclosure and void the subsequent sale. (Ill. Rev. Stat. 1979, ch. 110, par. 72.) In its petition, the bank alleged that there had been a prior oral agreement with the corporation counsel to "sit on the case" until the summer of 1979 in order to allow the bank sufficient time to obtain a buyer for the property in question. The bank further alleged that the action of the corporation counsel in moving for a default judgment on March 7, 1979, constituted a breach of that agreement and also alleged that no notice of motion was ever given by the city. Robert Heffernan, who was then the owner of the disputed property, was joined as a third-party defendant. On July 15, 1980, Heffernan moved to strike and dismiss the petition for failure to set forth the elements required in a section 72 petition. He specifically raised the bank's failure to allege any meritorious defense to the foreclosure, the lack of due diligence, and the failure to set forth the allegations necessary to prevail against a bona fide purchaser for value.

On October 20, 1980, the motion to strike and dismiss was argued before Judge Siegan by the attorneys for the bank and Heffernan. After both parties had presented their arguments, Judge Siegan stated that he was going to delve into something that was not raised by either party — the propriety of the sale conducted by the sheriff. Calling attention to certain discrepancies that existed in the record, the court noted that although the date of sale was advertised to be April 18, 1979, the actual sale was held on May 30, 1979. The court further noted that there was no indication that proper notice of the later sale date was given either through oral pronouncement or publication. Judge Siegan ruled that under the terms of the judgment of foreclosure, the sheriff had no authority to delay and reschedule the sale without republication of notice and the sale was therefore void. Counsel for Heffernan pointed out that the judge originally entering the judgment of foreclosure also entered an order confirming that the sale was in all respects proper. The repeated requests by Heffernan's counsel for additional time to brief the point raised sua sponte by the court were denied. The court entered an order granting the bank's section 72 petition, vacating the order confirming the sheriff's sale and declaring the sale null and void.

On appeal, Heffernan contended that the entry of a final dispositive order on grounds not raised by the pleadings and following a hearing held for the limited purpose of testing the legal sufficiency of his opponent's section 72 petition amounted to a denial of procedural due process. We agreed and reversed and remanded for further proceedings.

After being remanded to the trial court, Robert Heffernan died and his heirs-at-law, Gerald and Joseph Heffernan, were substituted in the action. The bank was given leave to amend its pleadings in order to raise the issue of the voidness of the judicial sale. On January 23, 1984, after hearing arguments of counsel and reviewing the record and materials submitted, the trial court dismissed the bank's section 72, now section 2-1401, petition. (Ill. Rev. Stat. 1983, ch. 110, par. 2-1401.) The trial court found that the order confirming the judicial sale cured any irregularities and that the bank had otherwise failed to meet the necessary statutory requirements for the relief requested.

On appeal from this order of the trial court, the bank raises essentially two issues for review. First, the bank attacks the validity of the default judgment of foreclosure and contends that the oral agreement between it and the city to "sit on the case" until the summer of 1979 was breached by the action of the city in moving for a default on March 7, 1979. The bank contends that this breach and the failure to give proper notice of motion are sufficient grounds for vacating the default judgment of foreclosure pursuant to section 2-1401. The bank next attacks the judicial sale as void because there was a 42-day delay between the advertised sale date and the actual sale date without republication of public notice. The bank contends that the sale was not conducted in accord with the applicable statutory procedures (Ill. Rev. Stat. 1979, ch. 77, par. 14) and was therefore void and subject to collateral attack at any time even if the original judgment of foreclosure is upheld. The third-party defendants have failed to file a brief with this court. However, pursuant to First Capitol Mortgage Corp. v. Talandis Construction Corp. (1976), 63 Ill.2d 128, 345 N.E.2d 493, we may reach the merits of the appeal. We affirm the judgment of the trial court dismissing the bank's section 2-1401 petition.

• 1 Under section 2-1301(e) of the Code of Civil Procedure, a party may move to vacate a default judgment within 30 days of its entry. (Ill. Rev. Stat. 1983, ch. 110, par. 2-1301(e).) A liberal policy exists with respect to vacating defaults under this section. (Mirmelli v. Great Western Truck Lines, Inc. (1977), 53 Ill. App.3d 39, 368 N.E.2d 539.) It is not necessary that such relief be sought on the precise grounds that there is a meritorious defense and a reasonable excuse for not having timely asserted such defense. The overriding consideration under section 2-1301(e) is whether it is reasonable, under the circumstances, to compel the other party to go to trial on the merits. (People ex rel. Reid v. Adkins (1971), 48 Ill.2d 402, 406, 270 N.E.2d 841.) However, once the 30-day time period has lapsed, as in the present case, relief from a default judgment may only be obtained under the more stringent requirements imposed by section 2-1401. (Ill. Rev. Stat. 1983, ch. 110, par. 2-1401; Goldstick v. Saporito (1974), 22 Ill. App.3d 621, 317 N.E.2d 774.) A petition for relief under this section invokes the court's equitable power to vacate a default judgment attended by unfair, unjust or unconscionable circumstances and it is incumbent on the petitioner to show that he has a meritorious defense and that he was diligent in protecting his rights. In re Application of Du Page County Treasurer (1980), 84 Ill. App.3d 506, 405 N.E.2d 869.

With respect to the bank's first argument, we do not believe the amended petition satisfies the more rigorous requirements imposed by section 2-1401 for vacating a default judgment. In this regard, we note that the bank has never asserted any meritorious defense to the underlying foreclosure action brought by the city. It never filed pleadings in the original foreclosure action denying any of the city's allegations, which ultimately resulted in the entry of a default judgment against the bank. In its section 2-1401 petition, the bank does not dispute the amount claimed by the city for demolition costs, nor does it deny liability for such costs. Rather, the bank relies on a purported oral agreement between the city attorney and the bank to "sit on the case" until the summer of 1979 in order to allow the bank to find a buyer for the property. The bank contends that it was prejudiced by the city's action in moving for a default in the spring of 1979. However, the verified petition filed by the bank belies this contention. The petition contains no allegation that a buyer for the property was, in fact, procured in the summer of 1979. Rather, the bank alleges that some time "in December 1979, or January 1980, the possibility of selling the property arose." Thus, even if the city had "sat on the case" until the summer of 1979, the bank would not have been able to produce a buyer for the property, and a judgment of foreclosure would have been entered in the city's favor. In view of the foregoing, we find that the bank's petition fails to set forth the requisite due diligence and meritorious defense for relief pursuant to section 2-1401 and also find that the bank was not prejudiced by the city's failure to "sit on the case" until the summer of 1979. Accordingly, we hold the trial court properly refused to vacate the default judgment of foreclosure.

• 2 Next, the bank contends that even if the default judgment of foreclosure cannot be attacked pursuant to section 2-1401, the judicial sale of the property was void for failure to comply with the publication requirements imposed by section 14 of the judgment act (Ill. Rev. Stat. 1981, ch. 77, par. 14), now section 12-115 of the Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, par. 12-115). The bank's argument is premised on the well-established rule that a void judgment or decree is subject to collateral attack at any time and that a court has inherent authority to expunge from its records void acts. (Reynolds v. Burns (1960), 20 Ill.2d 179, 192, 170 N.E.2d 122; In re Petition of Stern (1954), 2 Ill. App.2d 311, 120 N.E.2d 62.) Accordingly, the bank contends that the trial court erred in failing to vacate the void sale of property to Heffernan. We disagree.

In general, Illinois recognizes two classifications of void judgments subject to collateral attack. There are judgments which are void because the trial court lacked jurisdiction over the person or subject matter and there are judgments which are void because they are procured through fraud. (Johnston v. City of Bloomington (1979), 77 Ill.2d 108, 395 N.E.2d 549; Department of Revenue v. Joch (1951), 410 Ill. 308, 102 N.E.2d 155.) Similarly, in the area of judicial sales, collateral attacks are limited to sales which are void with but two grounds for invalidation — want of jurisdiction in the court ordering the sale and fraud practiced in effecting the sale. (See generally 50 C.J.S. Judicial Sales sec. 64(b) (1947), and cases cited therein.) Here, the bank's petition contains no allegations of fraud in connection with the sale. Rather, the bank contends that the statutory requirements for judicial sales imposed by section 12-115 are jurisdictional in nature and failure to follow those requirements renders the sale void.

Section 12-115 contains the "[n]notice of sale of real estate" requirements and provides:

"No real estate shall be sold by virtue of any judgment, except at public sale, between the hours of 9 in the morning and the setting of the sun of the same day, nor unless the time (specifying the particular hour of day at which the sale shall commence) and the place of holding such sale shall have been previously advertised 3 successive weeks, once in each week, in a newspaper published in the county where the sale is made (if there is any newspaper published in such county), and by placing written or printed notices thereof in at least 3 of the most public places in the county where the real estate is situated, specifying the name of the judgment creditor and judgment debtor in the judgment in all of which notices the real estate to be sold shall be described with ...


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