In re Application of County Collector

FIRST DIVISION
March 23, 1998

No. 1-96-3709

In re )
APPLICATION OF THE COUNTY )
COLLECTOR FOR JUDGMENT AND SALE )
AGAINST LANDS AND LOTS UPON )
WHICH THE GENERAL TAXES ARE )
DELINQUENT PURSUANT TO SECTION )
235(a) OF THE REVENUE ACT OF )
1939, AS AMENDED. )
----------------------------- )
(David Watson, ) Appeal from the
) Circuit Court
Petitioner-Appellant, ) of Cook County.
)
v. )
)
Edward J. Rosewell, Cook County )
Treasurer, as Trustee of the )
Indemnity Fund, ) Honorable
) RAYMOND JAGIELSKI,
Respondent-Appellee). ) Judge Presiding.

PRESIDING JUSTICE BUCKLEY delivered the opinion of the
court:
This is an appeal brought by petitioner David Watson
(Watson) from a trial court order denying his petition for relief
under the indemnity provisions of the Revenue Act of 1939, as
Amended. 35 ILCS 200/21-305 (West 1994). Watson lost his
property to a tax deed after his redemption payment was expunged
by the trial court in a collateral tax deed proceeding, as being
less than the full amount needed for redemption. Watson sought
indemnification. The trial court found that Watson was not
entitled to compensation and also denied Watson's motion for
rehearing and reconsideration. Watson appeals and raises the
following issue: whether the trial court's opinions, rulings and
judgment denying relief under the indemnity provision (35 ILCS
200/21-305 (West 1994)) were erroneous and against the manifest
weight of the evidence.
Watson testified at the indemnity hearing that he is 69
years old and employed as a roofer. He completed two years of
high school. Watson testified that he owns approximately 21
investment properties. Some of the properties are vacant lots
and some are unoccupied. In 1978, Watson purchased a two-flat at
1533 South Karlov in Chicago for approximately $7,000 as
investment property. Subsequently, Watson invested approximately
$40,000 in improvements and labor including a new roof, new
floors, tuck-pointing, and glass-block windows. Watson rented
out the building. He was responsible for making repairs, paying
utility bills and paying the real estate taxes.
Watson testified that he did not always pay the real estate
taxes on time. He stated that if the real estate taxes were
overdue, he would receive a letter from the Cook County
Collector's Office informing him that the building had been sold
for delinquent taxes. The letter would also provide a deadline
by which Watson could pay the taxes. He stated that after
receiving the letter, he would go to the fourth floor of the
County Building and request an estimate of redemption. Within a
week or two weeks Watson would receive an estimate in the mail.
He stated that he is familiar with the redemption process but
that he is not an expert. Watson also testified that he does not
understand how redemption estimates are calculated.
Regarding the property at issue, Watson testified that he
received notification that the property had been sold and was
given a deadline date of June 29, 1994, by which to redeem the
property. Watson went to the Cook County clerk's office and
requested an estimate of redemption. Watson testified that the
estimate of redemption was approximately $3,600 to $3,900. The
estimate contained Watson's name and home address of 1542 South
Karlov, which is different from the subject property's address.
Watson testified that on April 5, 1994, he went to the bank and
withdrew $4,000 and then went to the Cook County clerk's office.
Watson stated that he waited in line for awhile and then a
gentleman asked Watson if he could help him. Watson assumed that
this man was an employee; however, he didn't know for sure. In
response to the man's offer of help, Watson commented that the
taxes "look like an awful lot, doesn't it?" The man asked Watson
what the size of the house was and Watson told him that it was a
two-flat. The man took the estimate sheet from Watson and told
Watson to wait. The man went into the back for about 10 to 15
minutes. When he returned with the estimate sheet there was
whiteout over the original estimate and $1,600, a substantially
lower amount, was written in. The man gave Watson a temporary
receipt and later Watson received a certificate of deposit for
redemption in the mail certifying the payment. Watson testified
that the man at the Cook County clerk's office did not explain
the reason for the changes and Watson did not ask for an
explanation. Watson stated that he never told the man that he
lived in the building or that it was a single-family home.
Watson had no doubt at the time that he had made a valid
redemption. Watson stated that he assumed the man at the Cook
County clerk's office knew what he was doing.
The tax buyers, Command Properties, Inc., filed a motion to
expunge redemption, alleging that the redemption made by Watson
was "unlawful" because the property did not consist of a single-
family residential building and, therefore, the redemption was
insufficient.
Watson was given notice of the motion to expunge redemption
but felt he did not have grounds to "beat" that motion. The
County clerk, by his attorney, the State's Attorney of Cook
County, filed a response to the motion, seeking to dismiss the
taxbuyer's motion to expunge redemption. The motion to expunge
redemption was granted and a tax deed issued conveying the
property to the tax buyer, who recorded the deed.
Approximately eight months later, Watson instituted an
indemnity action by filing and serving a verified petition
against Edward J. Rosewell, as trustee of the indemnity fund
(Trustee). The petition asserted that Watson lost his property
to a tax deed through no fault or negligence of his own but
rather, through the error committed by the Cook County clerk in
computing the cost of redemption less than the correct amount as
if Watson resided at the property. The assistant State's
Attorney filed an unverified answer to the petition asserting
that the Trustee did not have sufficient facts to admit or deny
the allegations.
The only testimony at the indemnity hearing, other than
Watson's, came from Howard Richter, a licensed appraiser.
Richter testified that on December 12, 1994, the fair market
value of the property was $62,000. At the conclusion of the
indemnity hearing, the trial court took the matter under
advisement. The trial court ordered and read a transcript of the
hearing prior to issuing its decision. The trial court held that
Watson failed to meet the standard of being without fault or
negligence and stated, "I do not feel that someone who brings in
a tax bill for one of his many investment properties and has that
bill changed after he is asked a question what size house do you
live in -- not what size house the building is or the tax bill is
concerned -- meets that standard that has been annunciated in the
statute." The trial court stated that the indemnity fund was
created for no other purpose but to compensate persons who,
through no fault, find themselves facing the prospects of being
out in the street. Watson filed a motion for rehearing and/or
reconsideration which was denied by the trial court. This appeal
followed.
The crux of Watson's argument is that he was without fault
or negligence in the loss of his property to a tax deed and,
therefore, under the provisions of section 21-305 of the Property
Tax Code, he is entitled to a judgment against the indemnity fund
in the amount of the fair market value of the property. 35 ILCS
200/21-305 (West 1994).
Section 21-305 of the Property Tax Code provides:
"(a) Any owner of property sold under any
provision of this Code, who without fault or
negligence of his or her own sustains loss or
damage by reason of the issuance of a tax deed ***
and who is barred or in any way precluded from
bringing an action for the recovery of the
property or any owner of property containing 4 or
less dwelling units who resided thereon the last
day of the period of redemption who, in the
opinion of the Court which issued the tax deed
order, is equitably entitled to just compensation,
has the right to indemnity for the loss or damage
sustained. Indemnity shall be limited to the fair
cash value of the property as of the date that the
tax deed was issued, less any mortgages or liens
thereon." 35 ILCS 200/21-305 (West 1994).
In support of his argument, Watson directs this court's
attention to our decision in Garcia v. Rosewell, 43 Ill. App. 3d
512 (1976), in which we defined the terms "without fault or
negligence" as said terms are applied in the Indemnity Act. In
Garcia, we initially noted that the legislature enacted the
statute "at a time when there was a public outcry as the result
of tax buyers taking advantage of unsophisticated property owners
who had fallen behind on their taxes and then had fallen prey to
the complexities of the tax buying procedures despite their
willingness and ability to redeem their property." Garcia, 43
Ill. App. 3d at 515. The court reviewed the various meanings of
the words "fault" and "negligence" and concluded that the
legislature did not intend that they be given technical meanings.
Garcia, 43 Ill. App. 3d at 517. The court stated that "[t]o do
so would be to render the statute meaningless, because only those
who have run afoul of the provisions of the Revenue Act have
reason to invoke this particular statute. The statute was
apparently enacted to provide a remedy for the harsh results
caused by the legislative policy which favors the collection of
taxes and the merchantability of tax deeds. We think the purpose
is to do equity." Garcia, 43 Ill. App. 3d at 517. The court
went on to hold that "the meaning of 'without fault or
negligence' should be interpreted similar to the words 'without
fault' in the case of Glover v. Glover where the court held that
a party need not be totally blameless, but the person claiming
the asserted right must not have purposefully failed in a duty or
engaged in conduct that materially contributed to the problem
complained of." Garcia, 43 Ill. App. 3d at 517. The court
emphasized that each case must be decided on its facts. Garcia,
43 Ill. App. 3d at 517.
Watson contends that he did not "materially contribute to
the problem" that caused him to lose his property. He asserts
that he did not say or do anything or make any misrepresentations
to the county clerk that would justify the clerk's preparation of
an erroneous estimate. He further asserts that he had no reason
to presume that the amended estimate was improperly calculated.
Watson contends that he "fell prey to the complexities of tax
buying procedures despite his willingness and ability to redeem
his property." We disagree.
As the State contends, the trial court noted numerous times
that it could not find Watson's testimony credible. A court that
finds an indemnity petitioner's testimony to be incredible is not
obligated to award indemnity to that petitioner. The State
asserts that Watson's failure to contest the motion to expunge
the redemption and the issuance of a tax deed contradicts his
testimony that he believed himself to be a blameless victim and
is evidence of his lack of credibility. The State also points
out that even after the State's Attorney filed a memorandum
outlining cases stating that faultless redemptors should not
unfairly be deprived of their property, Watson still did not
contest the issuance of the tax deed. For example, Illinois
courts have held that the right of a property owner to redeem is
superior to the right of a purchaser to get a tax deed (In re
Application of Rosewell, 148 Ill. App. 3d 297, 303 (1986)) and
that when an incorrect payment is made and accepted by the
correct county official, a valid redemption may be found by the
circuit court. In re Application of the County Collector, 220
Ill. App. 3d 933 (1991). Additionally, the circuit court can
exercise its equitable powers to allow a redemption after the
redemption period has expired where a mistake by the appropriate
public official has occurred. Mutual Life Insurance Co. v.
Chambers, 88 Ill. App. 3d 952 (1980). The State asserts that in
light of the foregoing cases, Watson's failure to protect his
redemption iss so unexplainable that it affects his credibility.
The State cites Kirk v. Rosewell, 225 Ill. App. 3d 326, 329
(1992), in which the court stated that a trial court has broad
discretion in determining whether an owner is entitled to
compensation, and its conclusions should not be disturbed on
review absent abuse of that discretion. We agree with the State
and find that the trial court did not abuse its discretion in
denying Watson's petition for indemnification.
The State also contends that Watson should not be
indemnified since he failed to exhaust legal remedies to recover
his property before petitioning for redemption. The State cites
In re Application of Rosewell, 148 Ill. App. 3d 297 (1986), and
In re Application of the County Treasurer & ex officio County
Collector, 171 Ill. App. 3d 644 (1987), in support of this
argument. In Application of Rosewell, the county clerk made a
mistake as to the redemption deadline. The court noted:
"It has long been settled that Illinois law
favors redemption and unless injury results
to the purchaser at the sale, a liberal
construction will be given to redemption
laws. [Citation.] *** Moreover, the right
of a purchaser to get a deed is subservient
to the right of the owner or interested party
in the property to redeem. [Citation.] Our
United States Supreme Court has stated that
the right to redeem is a substantial right,
and when the exercise of that right is
prevented as a result of official mistake, a
court of equity has a duty to intervene.
[Citation.]
Illinois courts also consider the right
of redemption to be a substantial right. It
is important that anyone possessing the right
of redemption should not lose that right by
mistake or misinterpretation. [Citation.]"
Application of Rosewell, 148 Ill. App. 3d at
303-04.
The court applied the above principles of law and held that "a
court may properly exercise its equitable powers and allow
redemption even after the statutory period has expired in cases
where redemption may have been precluded due to fraud or mistake
on the part of the purchaser or public official." Application of
Rosewell, 148 Ill. App. 3d at 304.
In In re Application of the County Treasurer & ex officio
County Collector, 171 Ill. App. 3d 644 (1987), the taxpayer
obtained an estimate of redemption from the clerk's office which
was erroneous and paid that amount. The taxpayer did not attend
the hearing at which the court issued the tax deeds. Application
of the County Treasurer, 171 Ill. App. 3d at 648. The court
applied equitable principles and vacated the tax deed, finding
that the owner effectively redeemed the property by paying the
erroneous redemption amount prior to expiration of the redemption
date. Application of the County Treasurer, 171 Ill. App. 3d at
650.
The State asserts, and we agree, that based on the above
cited cases, Watson could have successfully challenged the tax
deed on similar grounds. Thus, Watson was not "barred or in any
way precluded from bringing an action for the recovery of the
property" as is required by the indemnity provision. The failure
of Watson to exhaust legal remedies also goes to his credibility
and whether he believed himself to be a blameless victim.
Watson also raises two procedural issues related to the
State's Attorney's act of filing an unverified answer on behalf
of the Trustee in response to Watson's verified petition. The
unverified answer recited that the Trustee had insufficient facts
with which to admit or deny the allegations, except to admit that
the Cook County clerk had contested the motion of Command
Properties, Inc., and that the court had entered an order
directing the issuance of a tax deed for the subject property.
First, Watson asserts that under section 605(a) of the Code of
Civil Procedure (735 ILCS 5/2-605(a) (West 1996)), when a
pleading is verified every subsequent pleading must also be
verified unless verification is excused and that filing an
unverified answer has the same effect as if no answer had been
filed at all. Watson cites Florsheim v. Travelers Indemnity Co.,
75 Ill. App. 3d 298, 308-09 (1979), and argues that when no
answer is filed, all well-pleaded facts are deemed admitted. The
State responds that Watson's failure to file a motion objecting
to the insufficiency of the unverified answer results in waiver
of that objection. The State cites Padgett v. A&M Insulation
Co., 266 Ill. App. 3d 320, 323 (1994), and argues that the
purpose of requiring that defects in pleadings be attacked by
motion is to allow the parties to cure them before trial. We
agree with the State and find that this issue is waived.
Second, Watson argues that the combination of the assistant
State's Attorney's Rule 137 certification (134 Ill. 2d R. 137)
arising from subscribing his name to the Trustee's answer and his
failure to introduce evidence of any kind at the indemnity
hearing and the subsequent motion for rehearing that would settle
the issue as to whether Watson in any way contributed to the
county clerk's preparation and acceptance of the amended
estimate, created a presumption, that the evidence, if produced,
would have been adverse to the Trustee and the county clerk.
Watson cites Wilkey v. Illinois Racing Board, 65 Ill. App. 3d 534
(1978), in which this court stated that "[u]nder Illinois law,
the failure of a party to introduce evidence which would
conclusively settle a doubtful issue gives rise to a presumption
that that evidence, if produced, would be adverse to that party."
Wilkey, 65 Ill. App. 3d at 539-40. We find Watson's argument
tenuous. Watson, as the party bringing the indemnity action, has
the burden of proving that he was "without fault or negligence."
It was the Trustee's decision to not call Cook County clerks to
testify. Moreover, the county clerk's office is not a party in
the indemnity action and the Trustee is under no obligation to
name the County Clerk as a third-party defendant. See People ex
rel. Partee v. Murphy, 133 Ill. 2d 402 (1990). Thus, we find
that no adverse presumption applies.
The trial court found Watson's testimony to be incredible
and there is evidence in the record to support the trial court's
finding. Accordingly, we find that the trial court did not abuse
its discretion in denying indemnification.
For the foregoing reasons, the judgment of the circuit court
of Cook County is affirmed.
Affirmed.
O'BRIEN and O'MARA FROSSARD, JJ., concur.