A.P. Properties, Inc. v. Goshinsky

No. 2--97--0923

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT

A.P. PROPERTIES, INC.,

Plaintiff-Appellant,

v.

ROBERT H. GOSHINSKY, LEEANNA K.
GOSHINSKY, COREY GOLDSTEIN, and
ILLINOIS REAL ESTATE OPPORTUNITY
FUND I, L.L.C.,

Defendants-Appellees.
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)Appeal from the Circuit
Court of Lake County.

No. 97--CH--365

Honorable
Emilio B. Santi,
Judge, Presiding.

In re APPLICATION OF THE COUNTY
TREASURER AND ex officio COUNTY
COLLECTOR OF LAKE COUNTY
ILLINOIS, for Judgment and Order
of Sale Against Real Estate
Returned Delinquent for
Nonpayment of General Taxes and
Special Assessment for the Year
1992 and Prior Years

(A.P. Properties, Inc.,
Petitioner-Appellant, v.
Illinois Real Estate Opportunity
Fund I, L.L.C., Respondent-
Appellee).
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)Appeal from the Circuit
Court of Lake County.

No. 93--TX--3

Honorable
Emilio B. Santi,
Judge, Presiding.

JUSTICE COLWELL delivered the opinion of the court:
A.P. Properties, Inc. (AP), filed a petition for a tax deed,
and respondent, Illinois Real Estate Opportunity Fund I, L.L.C.
(the Fund), filed a section 2--619(a)(9) motion to dismiss (735
ILCS 5/2--619(a)(9) (West 1996)). AP also filed a chancery
complaint, and defendants Robert H. Goshinsky, Leeanna K.
Goshinsky, Corey Goldstein, and the Fund filed a section 2--615
motion to dismiss (735 ILCS 5/2--615 (West 1996)). The circuit
court of Lake County consolidated the matters and granted both
motions, thereby dismissing with prejudice AP s causes of action.
AP timely appealed therefrom. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
In 1971, Kurt A. Goshinsky (Kurt) and his wife Ruth C.
Goshinsky (Ruth) purchased the property commonly known as 40159
North Donald Drive in Antioch (the property). Ruth died in 1990,
and Kurt died in 1993. On December 6, 1993, AP purchased the
delinquent taxes on the property at the Lake County tax sale. AP
set the redemption period to expire on November 29, 1996. On June
7, 1996, Leeanna K. Goshinsky (Leeanna), Kurt and Ruth s daughter,
conveyed her interest in the property to her brother Robert H.
Goshinsky (Robert). On November 19, 1996, Robert conveyed his
interest in the property to the Fund.
Prior to Robert s conveyance to the Fund, AP filed a petition
for a tax deed on July 26, 1996. AP alleged therein that it had
purchased the delinquent taxes on the property at the Lake County
tax sale on December 6, 1993, that the Lake County Clerk issued it
a certificate of sale, and that it had extended and set the
redemption period to expire on November 29, 1996. AP then prayed
for the issuance of a tax deed in the event that the property was
not redeemed.
On April 10, 1997, the Fund filed a section 2--619(a)(9)
motion to dismiss in response to AP s petition. The Fund argued
that AP failed to properly notify Robert, a claimed record title
holder, of the expiration of the redemption period (see 35 ILCS
200/22--10 (West 1996)) and that the Fund had made a valid
redemption of the property prior to the expiration of the
redemption period. In support, the Fund alleged that on June 7,
1996, Leeanna conveyed her interest in the property to Robert by
quitclaim deed. That same day, Robert recorded the quitclaim deed
with the Lake County Recorder of Deeds office. AP s service list
attached to its notice of the expiration of the redemption period
and AP s subsequent notice by publication, however, did not
explicitly include Robert.
The Fund further alleged that, on November 19, 1996, it
entered into a contract with Robert to purchase the property "as
is" and subject to all title defects and unpaid taxes for the net
sum of $5,000. On the same day, Robert executed a warranty deed
conveying the property to the Fund, and the Fund recorded the
warranty deed on November 20, 1996. Immediately thereafter, the
Fund paid $3,966.34 in redemption of the taxes on the property, and
the Lake County Clerk issued a redemption receipt that noted
redemption on November 20, 1996.
On April 21, 1997, AP filed its response to the Fund s motion.
In addition to other less relevant arguments, AP argued that the
Fund lacked a valid interest in the property and, therefore, the
Fund could not redeem the delinquent taxes. In addition, AP argued
that the failure of the Fund to file a written redemption under
protest allegedly prevented it from challenging AP s petition for
a tax deed.
In addition to AP s petition for a tax deed, on April 10,
1997, AP filed a chancery complaint. Therein, AP alleged the
following facts: (1) AP purchased the delinquent taxes on the
property at the tax sale; (2) AP held a certificate of sale and
filed the petition for a tax deed; (3) Leeanna owned the property;
(4) the redemption period was set to expire on November 29, 1996;
(5) on June 7, 1996, Leeanna transferred her interest in the
property to Robert; (6) on November 19, 1996, Robert transferred
his interest in the property to the Fund; (7) Robert remained in
possession of the property; (8) the value of the property was in
excess of the $5,000 sale price; (9) Leeanna and Robert were unable
to pay the delinquent taxes; (10) the Fund redeemed the taxes, but
AP refused to accept the redemption; and (11) but for the Fund s
redemption, AP would have obtained a tax deed to the property. AP
then alleged that the transfer to the Fund was fraudulent and in
violation of sections 5(a) and 6(a) of the Uniform Fraudulent
Transfer Act (the Act) (740 ILCS 160/5(a), 6(a) (West 1996)). AP
sought an order voiding the transfer from Leeanna and Robert to the
Fund or, in the alternative, a judgment against the Fund for the
fair market value of the property.
On May 22, 1997, the Fund, Goldstein, Robert, and Leeanna
filed a section 2--615 motion to dismiss AP s chancery complaint.
The movants argued that AP lacked standing under the Act because AP
suffered no injury when the Fund redeemed the delinquent taxes.
In response, AP argued that Leeanna and Robert were debtors
under the Act because they owned real property encumbered by a tax
lien and that AP was a creditor under the Act because it held a tax
certificate. Therefore, AP concluded that it had standing under
the Act.
In reply, the movants argued that AP lacked standing because
AP was not a creditor under the Act. The movants also argued that
the Fund was not a debtor under the Act because AP had no claim
against it; AP s claim was for money which was secured by the
property.
On May 22, 1997, the trial court consolidated the petition for
a tax deed with the chancery complaint. On August 12, 1997, the
trial court granted both motions and dismissed both causes with
prejudice. AP timely appealed.
ANALYSIS
I. SECTION 2--615 MOTION TO DISMISS CHANCERY COMPLAINT
In reviewing an order that granted a section 2--615 motion to
dismiss, a reviewing court should take as true all well-pleaded
facts in the complaint and all reasonable inferences from those
well-pleaded facts and should affirm the order if it clearly
appears that no set of facts could ever be proved that would
entitle the plaintiff to recover. Indlecoffer v. Village of
Wadsworth, 282 Ill. App. 3d 933, 940 (1996). The reviewing court s
review is de novo; therefore, it is not required to defer to the
trial court s judgment. Indlecoffer, 282 Ill. App. 3d at 940.
To state a cause of action under either section 5(a) or
section 6(a) of the Act, a plaintiff must allege the existence of
a debtor/creditor relationship and the existence of a claim. See
740 ILCS 160/5(a), 6(a) (West 1996). The Act defines a creditor as
a person who has a claim and a debtor as a person who is liable on
a claim. 740 ILCS 160/2(d),(f) (West 1996). A claim is "a right
to payment, whether or not the right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured."
740 ILCS 160/2(c) (West 1996).
In this case, the issue concerning AP s chancery complaint is
whether AP is able to allege the existence of a debtor/creditor
relationship and a claim. Thus, if AP is unable to allege the
existence of a debtor/creditor relationship and of a claim, the
trial court properly dismissed its chancery complaint.
AP contends that its claim arose at the time of the tax sale
and that Robert and Leeanna were its debtors because they were
liable to it for the delinquent taxes on the property. We
disagree.
To determine whether a debtor/creditor relationship existed in
this case and whether AP possessed a claim, we must first review
the Property Tax Code (the Code) (35 ILCS 200/1--1 et seq. (West
1996)). The Code provides the procedural framework for the
levying, valuation, extension, and collection of property taxes by
taxing districts. Property taxes are a lien on the property until
the taxes are paid or the property is sold under the Code. 35 ILCS
200/21--75 (West 1996).
After taxes become delinquent (see 35 ILCS 200/21--15 through
21--40 (West 1996)), the Code authorizes county collectors to apply
for a judgment against and the sale of any delinquent properties.
See 35 ILCS 200/21--110, 21--115, 21--145, 21--180, 21--260 (West
1996). To avoid the sale, the owner of the delinquent property may
pay the taxes to the county collector at any time before the sale.
35 ILCS 200/21--165 (West 1996). If a judgment is rendered against
the property, however, the Code authorizes the county collectors to
offer the property for sale to the highest bidder. 35 ILCS 200/21-
-190, 21--205, 21--260 (West 1996). The highest bidder pays the
county collector the amount bid and is liable to the county for the
amount due. 35 ILCS 200/21--240, 21--260 (West 1996). The amount
bid is even recoverable in a civil proceeding. 35 ILCS 200/21--240
(West 1996).
Upon judicial confirmation of the sale, the tax lien is
extinguished (35 ILCS 200/21--260 (West 1996)), and the county
clerk and the county collector issue the purchaser a certificate of
purchase (35 ILCS 200/21--250, 21--260 (West 1996)). The sale,
however, does not affect the owner s personal liability for the
taxes, nor does it prevent the institution of a proceeding under
section 21--440 of the Code to collect any amount that may remain
due after the sale. 35 ILCS 200/21--260, 21--440 (West 1996).
After the issuance of the certificate of purchase, the
purchaser may then file a petition for a tax deed. 35 ILCS 200/21-
-260 (West 1996). However, the owner of the delinquent property or
a person interested therein has the right to redeem the property
from a tax sale. 35 ILCS 200/21--260(f), 21--345 (West 1996). The
person desiring to redeem deposits the appropriate amount with the
county collector payable to the county collector (35 ILCS 200/21--
355 (West 1996)), and the purchaser s receipt of the redemption
money releases the purchaser s claim to the property (35 ILCS
200/21--390 (West 1996)). Conversely, if the redemption period
expires and the property has not been redeemed, the court orders
the county collector to issue the purchaser a tax deed. 35 ILCS
200/22--40 (West 1996).
According to the procedures of the Code, AP s debtor/creditor
relationship existed with the county collector, not with Leeanna or
Robert. For instance, the county collector offered the property
for sale, and AP paid the county collector the amount bid. If AP
had not paid the county collector the amount bid, AP would have
been liable to the county collector in a civil proceeding for the
amount bid. Thus, during the sale process, the county collector,
as a creditor, held a claim against AP, as a debtor.
Additionally, when an owner or interested party redeems the
delinquent taxes on a property, as in this case, the county clerk
issues the redemption money to the purchaser. As a result, during
the redemption process AP held a claim against the county collector
for the redemption money. See City of Chicago v. City Realty
Exchange, Inc., 127 Ill. App. 2d 185, 190 (1970)(one of the
interests a tax purchaser acquires through a certificate of
purchase is the right to be paid the price of the sale, interest,
costs, and any other taxes paid, if there is redemption); In re
Bequette, 184 B.R. 327, 336 (S.D. Ill. 1995) (a certificate of
purchase gives the tax purchaser the right to receive payment if
the property is redeemed within the statutory redemption period).
The owner of the property, however, is not involved in the
relationship between the county collector and the purchaser. In
fact, the owner s debtor/creditor relationship also exists with the
county collector. Prior to the tax sale, the owner may redeem by
paying the county collector. In addition, when the tax lien is
extinguished by the tax sale confirmation, the owner remains liable
for the taxes due and a civil proceeding may be instituted against
the owner to collect the taxes due on the property. Moreover, to
redeem the property, the owner deposits the redemption amount with
the county collector payable to the county collector.
Consequently, AP did not have a claim against Leeanna or Robert,
nor did AP have a debtor/creditor relationship with them.
Furthermore, AP suffered no injury as a result of the Fund s
redemption. The right of a tax certificate holder to receive a
deed is subservient to the right of a person interested in the
property to redeem. Monreal v. Sciortino, 238 Ill. App. 3d 475,
479 (1992). The mere failure of the tax certificate holder to get
a deed cannot be considered as injury, since the certificate of
purchase gives the purchaser no legal or equitable title in the
land and the purchaser recovers the amount paid for the certificate
from the court after the redemption. Monreal, 238 Ill. App. 3d at
479; In re Application of Du Page County Collector, 98 Ill. App. 3d
950, 952 (1981).
Accordingly, Robert s transfer of the property to the Fund
cannot be fraudulent under the Act. Since AP cannot state a claim
under the Act, the trial court s dismissal of AP s chancery
complaint was not erroneous.
II. SECTION 2--619 MOTION TO DISMISS PETITION FOR A TAX DEED
The purpose of a section 2--619 motion to dismiss is to
dispose of issues of law and easily proved issues of fact from the
outset of a case, and a court may consider pleadings, depositions,
and affidavits. Spiegel v. Hollywood Towers Condominium Ass n, 283
Ill. App. 3d 992, 998 (1996). If a cause of action is dismissed
pursuant to a section 2--619 motion to dismiss, the questions on
appeal are whether a genuine issue of material fact exists and
whether the defendant is entitled to a judgment as a matter of law.
Wright v. City of Danville, 174 Ill. 2d 391, 398-99 (1996). Our
review is de novo. Spiegel, 283 Ill. App. 3d at 998.
AP raises two arguments regarding the dismissal of its
petition for a tax deed. First, AP contends that, if Robert s
transfer of the property to the Fund was fraudulent under the Act,
the Fund lacked standing to redeem the delinquent property.
Second, AP contends that, regardless of whether Robert s transfer
was fraudulent under the Act, the Fund s redemption was defective
because it did not file a redemption-under-protest form.
Regarding AP s first argument, as stated above, Robert s
transfer of the property to the Fund was not fraudulent under the
Act. Accordingly, the Fund owned the property at the time of
redemption and, thus, possessed standing to properly redeem the
property. See 35 ILCS 200/21--345 (West 1996).
Regarding AP s second contention, we reject AP s reliance on
In re Application for Judgment and Sale by the County Treasurer and
ex officio County Collector of St. Clair County, 276 Ill. App. 3d
1084 (1995)(Galmon). Instead we follow this court s previous
ruling in In re Application of the County Treasurer & ex officio
County Collector, 292 Ill. App. 3d 310 (1997)(Bluegreen), and hold
that the Fund was not required to file a protest form to redeem the
delinquent property. See also In re Application for Judgment and
Sale by the County Treasurer and ex officio County Collector of La
Salle County, Illinois, 294 Ill. App. 3d 487 (1998)(declining to
follow Galmon and following Bluegreen).
Therefore, since defendants were entitled to a judgment as a
matter of law, the trial court properly dismissed AP s petition for
a tax deed.
Based upon the foregoing, we affirm the judgment of the
circuit court of Lake County.
Affirmed.
INGLIS and McLAREN, JJ., concur.