APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FIRST DIVISION
519 N.E.2d 949, 166 Ill. App. 3d 537, 116 Ill. Dec. 734 1988.IL.35
Appeal from the Circuit Court of Cook County; the Hon. Charles E. Freeman, Judge, presiding.
JUSTICE O'CONNOR delivered the opinion of the court. CAMPBELL, P.J., and BUCKLEY, J., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE O'CONNOR
This appeal concerns the priority of liens and the interplay between the recording requirements of "An Act concerning land titles" (the Torrens Act or the Act) (Ill. Rev. Stat. 1983, ch. 30, par. 45 et seq.) and Federal tax lien procedure. Fleet Mortgage Corporation (Fleet) filed suit to foreclose a mortgage held on a property owned by Betty Brackenridge. U.S. Conglomerate, Inc. (Conglomerate), a party defendant by virtue of its purchase of the property at an Internal Revenue tax sale, was granted summary judgment based upon the trial court's determination that Conglomerate's interest in the property was superior to the mortgage held by Fleet. On appeal, Fleet raises two issues: (1) whether the failure of U.S. Conglomerate to comply with the notice and registration requirements of section 82 of the Torrens Act (Ill. Rev. Stat. 1983, ch. 30, par. 119) precludes it from obtaining title; and (2) whether the IRS notice of lien identifying the taxpayer as Betty Bradly [ sic ] was sufficient, so as to provide constructive notice of its interest in a property registered under the Torrens Act in the name of Betty Brackenridge. We reverse.
Adolph Brackenridge and Betty Brackenridge approached West America Mortgage Company (West America) to request a loan to be secured by a mortgage on property owned by Betty Brackenridge and commonly known as 7519 South Green Street, Chicago, Illinois. The loan was approved and on March 29, 1982, Adolph Brackenridge and Betty Brackenridge executed a mortgage to West America on the property, securing a note in the amount of $47,200. The mortgage was registered with the Cook County registrar of titles (registrar) as document number 3254719. On April 29, 1982, West America assigned the mortgage and note to Fleet and the assignment was registered as document number 3268503.
The property securing the note was owned by Betty Brackenridge, who had originally purchased the property with her former husband Ernest Bradley in November of 1963. Subsequent thereto, Ernest Bradley died and Betty Bradley married Adolph Brackenridge. On January 3, 1975, title to the property was transferred into the name of Betty Brackenridge by an "Affidavit by Surviving Joint Tenant," which was registered as document number 2789793.
During 1980 and 1981, Betty Brackenridge failed to pay certain business taxes, resulting in a Federal tax lien on her property. The notice of Federal lien filed by the IRS to perfect the lien identified the taxpayer as Betty Bradly [ sic ], a misspelling of Betty Brackenridge's former married name. Pursuant to 26 U.S.C. § 6331 (1982), the IRS then seized the property and sold it at a public auction on September 23, 1985. Conglomerate was the high bidder at the auction with a bid of $10,000 and thus received a certificate of sale. The certificate of sale was registered on October 10, 1985, as document number 3268502.
On September 30, 1985, Fleet filed a complaint against various defendants to foreclose its note and mortgage on the property. On January 21, 1986, Fleet amended its complaint to include Conglomerate. Thereafter, Conglomerate filed an answer and affirmative defense based on the interest it obtained at the tax sale and the priority of the IRS lien. Both Conglomerate and Fleet moved for summary judgment.
The trial court held in favor of Conglomerate on the basis that the misspelling of the name Bradley (Bradly) was not significant and that the notice of lien would have been discovered during a reasonable search of the tax lien register.
On appeal, Fleet contends that the Torrens Act controls all transfers of property by tax sale when the title of the property transferred is registered under the Act. Fleet's position is that the failure of Conglomerate to comply with the notice and registration requirements of section 82 of the Act precludes it from obtaining title.
Conglomerate maintains that it was not required to comply with the notice and registration requirements of the Torrens Act as the Torrens Act does not control transfers of property by IRS tax sale. Conglomerate contends that the notice and filing requirements for Federal tax liens set forth in 26 U.S.C. § 6323 (1982) relieve it of any duties under section 82 as this notice gives subsequent purchasers notice of the IRS' interest. Conglomerate further argues that the statutory scheme of the Torrens Act excludes Federal tax sales.
The Illinois Torrens Act (Ill. Rev. Stat. 1983, ch. 30, par. 45 et seq.) was enacted to provide for an independent system of registration of a property's title so that a potential purchaser of land can determine, by the inspection of the certificate, the condition of the title. (Echols v. Olsen (1976), 63 Ill. 2d 270, 275, 347 N.E.2d 720.) To this end, the registrar is required to maintain a certificate of the title indicating the condition of the title. (La Salle National Bank v. Triumvera Homeowners Association (1985), 133 Ill. App. 3d 303, 306, 478 N.E.2d 1033, appeal denied (1985), 108 Ill. 2d 567.) Because the Act provides for both a system of land registration and ...