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In re Application of County Treasurer and Ex Officio County Collector

Court of Appeals of Illinois, Fourth District

September 12, 2017

In re APPLICATION OF COUNTY TREASURER AND ex officio COUNTY COLLECTOR, for Judgment and Order of Sale Against Real Estate Returned Delinquent for Nonpayment of General Taxes and Special Assessments for the Year 2010 and Prior Years
v.
Daniel Welch, in His Official Capacity as Champaign County Treasurer and ex officio County Collector, Defendant-Appellant. Community Enrichment Group, LLC, Plaintiff-Appellee,

         Appeal from the Circuit Court of Champaign County, No. 11-TX-01-S-055; the Hon. Holly F. Clemons, Judge, presiding.

          Julia Rietz, State's Attorney, of Urbana (Barbara J. Mann and Donna M. Davis, Assistant State's Attorneys, of counsel), for appellant.

          John Barr, of Barr & Barr, of Decatur, for appellee.

          Panel JUSTICE APPLETON delivered the judgment of the court, with opinion. Justices Harris and Holder White concurred in the judgment and opinion.

          OPINION

          APPLETON, JUSTICE

         ¶ 1 At an annual tax sale, plaintiff, Community Enrichment Group, LLC, bought the 2010 taxes for 1505 North Neil Street, Champaign, Illinois, Property Index No. 41-20-01-401-036. The period of redemption expired, and the owner never did redeem the property. Even so, to obtain a tax deed, plaintiff had to pay all taxes that became due and payable subsequent to the sale. See 35 ILCS 200/22-40(a) (West 2014) (effective June 1, 2015). That meant paying the taxes for 2011 to 2014-a routine and expected cost.

         ¶ 2 In addition, however, plaintiff had to redeem all sales that occurred subsequent to the sale. See id. This item was unforeseeable and unquantifiable at the time plaintiff bought the 2010 taxes. After the tax sale to plaintiff, a prior tax purchaser, the purchaser of the 2008 taxes, obtained the judicial declaration of a "sale in error" (35 ILCS 200/21-310(b)(1), (4) (West 2012)) and was refunded the amount it had paid for the 2008 taxes. As a result, the 2008 taxes became delinquent again, and a third tax purchaser bought them. This sale to the third tax purchaser was subsequent to the sale of the 2010 taxes to plaintiff. Again, to obtain a tax deed, plaintiff not only had to pay the 2011 to 2014 taxes but also had to redeem any tax sale that occurred subsequent to the tax sale to plaintiff. See 35 ILCS 200/22-40(a) (West 2014) (effective June 1, 2015). That meant redeeming the sale of the 2008 taxes to the third tax purchaser. With the accumulated penalties and interest, the cost of doing so was quite substantial, $188, 085.12. Plaintiff paid that amount, together with the 2011 to 2014 taxes, and obtained a tax deed.

         ¶ 3 After recording its tax deed, plaintiff moved for the declaration of a sale in error (35 ILCS 200/21-310(a)(1) (West 2014) (effective June 1, 2015)) and requested a refund of the $188, 085.12, the amount plaintiff had paid to redeem the sale of the 2008 taxes. Specifically, plaintiff invoked the first sentence of section 22-40(b): "If taxes for years prior to the year or years sold are or become delinquent subsequent to the date of sale, the court shall find that the lien of those delinquent taxes has been or will be merged into the tax deed grantee's title ***." 35 ILCS 200/22-40(b) (West 2014) (effective June 1, 2015). Over the objection of defendant, Daniel Welch, the Champaign County treasurer and ex officio county collector, the trial court granted plaintiff's motion. Defendant appeals.

         ¶ 4 The parties agree that our standard of review in this appeal should be de novo, since the facts are undisputed and all we have to do is interpret the relevant statutes and apply them to the undisputed facts. See American Federation of State, County & Municipal Employees (AFSCME), AFL-CIO v. County of Cook, 136 Ill.2d 334, 349 (1990). In our de novo review, we conclude that the requested refund is contrary to section 22-40(a) of the Property Tax Code (35 ILCS 200/22-40(a) (West 2014) (effective June 1, 2015)). We further conclude it is impossible to obtain the declaration of a sale in error while retaining title to the property. Therefore, we reverse the trial court's judgment.

         ¶ 5 I. BACKGROUND

         ¶ 6 The property taxes on 1505 North Neil Street (the property) were delinquent for the 2008 tax year. On October 28, 2009, at the annual tax sale, Vista Securities, Inc. (Vista), bought the taxes, and defendant, in his capacity as the ex officio county collector, issued certificate of purchase No. 635 to Vista. (By "bought the taxes, " we mean that Vista paid the 2008 taxes plus costs and interest and, in return, it received a lien on the property, as memorialized by the certificate of purchase. See City of Bloomington v. John Allan Co., 18 Ill.App.3d 569, 576 (1974); In re Application of County Treasurer of Cook County for Sale of Certain Real Estate for Delinquent Taxes, 14 Ill.App.3d 1062, 1065 (1973); City of Chicago v. City Realty Exchange, Inc., 127 Ill.App.2d 185, 190 (1970).) The certificate was evidence of Vista's right to obtain title to the property if, when the redemption period expired, its lien was unredeemed. See 35 ILCS 200/21-350, 21-355 (West 2008); In re Application of the County Treasurer & ex officio County Collector, 373 Ill.App.3d 679, 686-87 (2007). Vista then would have the right, but not the duty, to exchange the certificate for a tax deed, subject to the fulfillment of all the statutory conditions. See 35 ILCS 200/22-40(a) (West 2008); County Collector, 373 Ill.App.3d at 686-87.

         ¶ 7 Afterward, the taxes on the property were unpaid for the 2010 tax year as well. On October 28, 2011, at the annual tax sale, plaintiff bought the 2010 taxes, paying $12, 681.94. In return, defendant, as the ex officio county collector, issued certificate of purchase No. 583 to plaintiff.

         ¶ 8 In 2012, after plaintiff bought the 2010 taxes, Vista applied for the judicial declaration of a sale in error, alleging that (1) improvements to the property had been destroyed since the tax sale to Vista (see 35 ILCS 200/21-310(b)(2) (West 2012)) and (2) the property contained hazardous waste and an underground storage tank, which would have to be removed (see 35 ILCS 200/21-310(b)(4) (West 2012)).

         ¶ 9 On November 20, 2012, the trial court granted Vista's application for the declaration of a sale in error, ordering defendant, as the ex officio county treasurer, to refund to Vista the 2008 taxes it had paid for certificate of purchase No. 635. See 35 ILCS 200/21-310(d) (West 2012).

         ¶ 10 Accordingly, on November 27, 2012, defendant refunded to Vista the 2008 taxes, which Vista had paid for the (now canceled) certificate of purchase No. 635. See id.

         ¶ 11 On October 25, 2013, defendant declared the 2008 taxes to be due and delinquent because of the allowance of Vista's application for a sale in error. By then, interest and penalties had increased the 2008 taxes to $109, 316.28. See 35 ILCS 200/18-250(a) (West 2012). On that date, at the annual tax sale, a third purchaser, whom plaintiff identifies in its brief as "the Champaign County Trustee, " bought the 2008 taxes and was issued certificate of purchase No. 512.

         ¶ 12 On April 27, 2014, plaintiff filed a petition, requesting that the trial court order the issuance of a tax deed to plaintiff in the event the property was not redeemed by the extended deadline of August 22, 2014. See 35 ILCS 200/21-385, 22-30 (West 2014). In the petition, plaintiff's attorney verified to the court, under penalty of perjury (see 735 ILCS 5/1-109 (West 2014)), "[t]hat all taxes and special assessments which become due and payable on said parcel of real estate subsequent to the date of said sale and prior to the issuance of a tax deed, [would] be paid and all forfeitures and sales occurring in said interval, if any, [would] be redeemed." See 35 ILCS 200/22-40(a) (West 2014) (effective until June 1, 2015).

         ¶ 13 On August 27, 2014, the trial court ordered the issuance of a tax deed to plaintiff, since the property was unredeemed. One of the findings in the order was as follows:

"4. That all general taxes and special assessments which have become due and payable subsequent to said sale have been or will be paid prior to the issuance of the tax deed, and all forfeitures and sales which occurred subsequent thereto have been redeemed or will be redeemed prior to the issuance of the tax deed."

         ¶ 14 On May 18, 2015, plaintiff filed a "Motion For Order of Merger of Real Estate Taxes." (Plaintiff had not yet gone to the county clerk and obtained a tax deed.) In its motion, plaintiff requested a judicial order to the following effect:

"That this Court enter an order declaring the 2008 real estate taxes as previously identified by tax certificate 635 and now identified as tax certificate 512 have been merged into the tax deed title to be obtained by [plaintiff] in its tax deed and further directing the Champaign County Treasurer and Champaign County Clerk to reflect that declaration in the warrant and judgment records."

         Plaintiff cited section 22-40(b) (35 ILCS 200/22-40(b) (West 2014) (effective until June 1, 2015)) as authority for the proposed "merger."

         ¶ 15 On June 10, 2015, defendant filed an objection to plaintiff's "Motion For Order of Merger of Real Estate Taxes." Citing In re Application of the County Treasurer & ex officio County Collector of Cook County, 389 Ill.App.3d 398, 402-03 (2009) (hereinafter Elzey), he argued it would be a violation of section 22-40(a) of the Property Tax Code (35 ILCS 200/22-40(a) (West 2014) (effective June 1, 2015)) to issue plaintiff a tax deed before "all taxes and special assessments which became due and payable subsequent to the [tax] sale ha[d] been paid and all forfeitures and sales which occur[red] subsequent to the sale ha[d] been redeemed."

         ¶ 16 On June 24, 2015, plaintiff's attorney offered to "dismiss, " "without prejudice, " the "Motion For Order of Merger of Real Estate Taxes." In response, the trial court ordered: "[T]he motion for an order of merger of real estate taxes is withdrawn with leave to reinstate. We will show the [defendant's] objection [to the motion] is accordingly stricken as moot."

         ¶ 17 On July 23, 2015, plaintiff paid $12, 146 for the 2011 taxes, $12, 679 for the 2012 taxes, $12, 922 for the 2013 taxes, and $13, 039 for the 2014 taxes. Those were the taxes for the years subsequent to the tax sale to plaintiff. In addition, plaintiff paid the taxes for 2008, a year predating the sale to plaintiff. The reason was that after the sale to plaintiff, the trial court granted Vista's declaration of a sale in error, defendant therefore declared the 2008 taxes to be again due and delinquent, and the Champaign County trustee bought the 2008 taxes. Thus, the 2008 taxes went into arrears after the sale to plaintiff, just like the taxes for 2011, 2012, 2013, and 2014. Plaintiff paid $188, 085.12 to redeem the sale of the 2008 taxes to the Champaign County trustee. (Interest and penalties had increased the 2008 taxes to that amount.) On July 23, 2015, after plaintiff made all those payments, the county clerk issued a tax deed to plaintiff, and plaintiff recorded it.

         ¶ 18 On September 17, 2015, plaintiff filed a "Motion For Sale in Error and Merger." In that motion, plaintiff invoked two sections of the Property Tax Code: section 21-310(a)(1) (35 ILCS 200/21-310(a)(1) (West 2014)) and section 22-40(b) (35 ILCS 200/22-40(b) (West 2014) (effective June 1, 2015)). ...


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