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03/30/88 In Re Application of the County Collector (Arrowhead

March 30, 1988



Development Corporation, Petitioner-Appellee, v.

Charles J. Gramlich et al., Objectors-Appellants)

521 N.E.2d 616, 167 Ill. App. 3d 521, 118 Ill. Dec. 334 1988.IL.460

Appeal from the Circuit Court of Sangamon County; the Hon. Richard E. Mann, Judge, presiding.


PRESIDING JUSTICE GREEN delivered the opinion of the court. McCULLOUGH and SPITZ, JJ., concur.


On November 5, 1986, petitioner Arrowhead Development Corporation (Arrowhead) filed a petition in the circuit court of Sangamon County seeking a tax deed for property, the real property taxes upon which it had purchased at a tax sale held November 24, 1984. On March 24, 1987, objector Charles J. Gramlich filed objections to the issuance of the tax deed, and, on April 1, 1987, that objector filed a redemption under protest with both the circuit clerk and the county clerk in the form required by section 253 of the Revenue Act of 1939 (Act) (Ill. Rev. Stat. 1985, ch. 120, par. 734). The sum of $49,264.43 was deposited for redemption. Acting pursuant to section 253, the court held an evidentiary hearing in regard to the protest and June 16, 1987, entered an order denying and striking the protest and ordering the redemption funds to be transmitted to the petitioner upon its surrender of the certificate of sale. An additional effect of the order was to deny the petition for issuance of deed.

The objector has appealed, contending: (1) he was entitled to notice of the petition for issuance of tax deed by the terms of section 266 of the Act (Ill. Rev. Stat. 1985, ch. 120, par. 747) and that notice was neither properly served upon him nor did it properly describe the property involved; (2) the petition for issuance of tax deed also failed to properly describe that property; (3) the tax sale upon which the petition for deed was based was void because petitioner did not make timely payment for the purchase of the taxes; and (4) the portion of the judgment upon which the tax sale was based which represented 1980 real estate taxes was void because the circuit court lacked jurisdiction to enter that portion of the judgment. We disagree with these contentions and affirm the judgment of the circuit court.

Section 266 of the Act requires a tax sale purchaser at the type of sale involved here, upon filing a petition for issuance of a tax deed after the expiration of the redemption period, to give notice to "occupants, owners, and persons interested in the real estate" of the filing of the petition and the date on which the purchaser will apply for the deed. (Ill. Rev. Stat. 1985, ch. 120, par. 747.) The notice is to be given in the manner as required by section 263 of the Act. (Ill. Rev. Stat. 1985, ch. 120, par. 744.) The record here clearly shows that the objector was not served in the manner required by section 263. The objector was neither an owner nor an occupant of the real estate at the time of the tax sale or at any subsequent time. Thus, the most important question in the case becomes whether the objector was "a [person] interested in the real estate" at the pertinent time, within the meaning of section 266.

The objector's claim of interest arises from a complicated set of mostly undisputed facts. The objector and George Ayling made purchase of the property in 1977 and took it subject to an existing mortgage, the debt of which objector assumed. However, the objector admitted he was unaware of any recording of the instrument by which he assumed the indebtedness. The sale was effectuated by the seller deeding to Land of Lincoln Bank as trustee under a land trust, the beneficiaries of which were the two men. In 1980 the property was sold to V. M. Company, which also assumed the mortgage. Later, V. M. Company placed the property in a land trust with the First National Bank of Springfield as trustee and V. M. Company as beneficiary. The latter then assigned its beneficial interest to that bank as security for a loan. The tax sale occurred after V. M. Company had defaulted on the mortgage loan which it had assumed and on the property taxes. The county collector then took judgment for the unpaid taxes, and the previously described tax sale was held pursuant to the judgment. As the objector had conveyed his rights to the property long before the tax sale, the prime question to be decided is whether objector's liability on the mortgage debt made him a "person interested" in the property within the meaning of section 266. He maintains he has that interest because the extinguishment of the mortgage lien would prevent that security from use to satisfy the mortgage indebtedness and thus increase his exposure.

In asserting that he was a "person interested" within the meaning of the foregoing legislation, the objector attempts to draw analogy to various decisions of the appellate court of this State which have favored parties who are adverse to those purchasing at tax sales. One such case is In re Application of County Treasurer of Du Page County (1973), 16 Ill. App. 3d 385, 306 N.E.2d 743. There, the court held that an assignee, for purposes of security, of a beneficial interest in a land trust had a right to redeem from a tax sale. The objector also cites In re Application of Rosewell (1984), 126 Ill. App. 3d 30, 466 N.E.2d 1230, where a tax sale purchaser was held to not be entitled to a deed to the property because of failure to give the required notice of a petition for the deed to the Chicago park district. The purchaser had actual knowledge that the park district had, through separate litigation, obtained a judgment directing the issuance to it of a deed to the property. The objector correctly points out that petitioner here had actual knowledge of objector's liability on the existing mortgage.

In First Lien Co. v. Marquette National Bank (1973), 56 Ill. 2d 132, 306 N.E.2d 23, the court held that former beneficiaries of a land trust who had assigned their beneficial interest to their son were not persons entitled to notice under section 266 of the Act. The court described those entitled to such notice as being "the occupants or persons in actual possession, the person in whose name the property was last assessed for general taxes, the owners and trustees or mortgagees of record" (56 Ill. 2d at 136, 306 N.E.2d at 26). In Application of County Treasurer of Du Page County, the appellate court did permit a beneficiary of a land trust to redeem but stated that a "land trust beneficiary is not entitled to notice of tax sale proceedings" (emphasis added) (16 Ill. App. 3d at 390, 306 N.E.2d at 748) and defined the right to redeem more broadly than the right to receive notice.

While the mortgagee on the mortgage was clearly entitled to notice under section 266 of the Act, no case has been called to our attention where a person or entity has been held to be entitled to such notice merely because they were liable on indebtedness secured by a mortgage on the premises for which a tax deed is sought. The latest supreme court pronouncement on the question in First Lien does not mention mortgagors or persons who have assumed a mortgage as being so entitled. The cases do not define the limits of the phrase "persons interested" in section 266. However, we conclude that a person who by an unrecorded document not in the chain of title has assumed indebtedness ...

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