Chrysler First Financial Services Corp. v. Best Investments

Citations: 179 Ill. App. 3d 1067; 128 Ill. Dec. 961; 535 N.E.2d 472; 1988 Ill. App. LEXIS 1776Docket: No. 3—88—0143

Court: Appellate Court of Illinois; December 22, 1988; Illinois; State Appellate Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Best Investments appeals a circuit court decision that granted Chrysler First Financial Services Corporation's petition to vacate a tax deed. Best Investments argues that the trial court incorrectly set aside its tax deed without evidence of fraud or deceptive practices in notifying the parties entitled to notice. Best also contends that the Garringtons' bankruptcy filing did not extend the tax sale redemption period, but this argument is deemed unnecessary for the appeal's resolution.

The case involves Robert and Beverly Garrington, who mortgaged two Joliet properties to Finance America Corporation, later known as Chrysler. One property was sold to Best Investments for delinquent taxes, while the other was forfeited and subsequently redeemed by Chrysler after the tax delinquency notice was issued. Finance America initiated foreclosure proceedings in June 1986, leading to a sheriff's sale in December 1986, with a redemption period expiring in June 1987.

Best Investments petitioned for a tax deed in March 1987, claiming the Garringtons were served but that it could not locate Finance America. The Garringtons filed for bankruptcy on June 29, 1987. Chrysler recorded its sheriff's deed on July 10, 1987, after the Garringtons had filed for bankruptcy.

The trial court issued a tax deed to Best Investments on August 7, 1987. Chrysler subsequently filed a section 2-1401 petition to vacate this order, which was granted in March 1988. Illinois Supreme Court precedent requires property owners to demonstrate fraud to vacate a tax deed judgment. The court found that Best Investments acted with intent to deceive Chrysler, despite its claims of compliance with notice requirements.

Under section 263 of the Revenue Act of 1939, purchasers at tax sales are required to provide notice of the sale and the expiration of the redemption period at least three months and no more than five months prior. Notice must be served personally or, under certain conditions, by certified mail through the circuit court clerk. For unknown owners and interested parties, notice can be given by publication. 

In this case, Chrysler did not receive the required notice regarding the tax sale or the expiration of the redemption period. Best Investments claimed to have made diligent efforts to notify the mortgagee, Finance America, through mail and phone calls, as detailed in an affidavit from its agent, Jesse McCormick. Their search included local phone directories, inquiries with local residents, and examination of records at the Will County recorder’s office. However, the court found Best's efforts lacking, noting that they made no attempt to contact Chrysler’s attorneys or ascertain information about Chrysler’s registered agent or the building owner.

While failure to notify does not equate to fraud, any intent to deceive is crucial in such determinations. The record includes several affidavits from Chrysler asserting that Best concealed the notice of pending proceedings. It was revealed that McCormick had previously contacted Chrysler's real estate broker, Pat MacDonald, regarding the sale of the property, during which he instructed her not to inform Chrysler about the proceedings, claiming it would only delay matters. Additionally, Chrysler's attorney, Carleen Cignetto, contacted McCormick based on information relayed from Chrysler's employee, Mark Rief.

McCormick was open to selling his tax deed to Chrysler but failed to inform Cignetto that he was applying for the deed. Cignetto learned from Mark Rief that Chrysler would offer $2,000 for the deed. After multiple attempts, Cignetto reached McCormick on August 5, who rejected the offer and stated he would consider making a counteroffer, but he did not follow up or inform Chrysler about a scheduled hearing regarding his application for the tax deed on August 7, 1987. Investigations revealed that the court approved the tax deed on August 7, and it was issued on September 8. Best Investments acknowledged these facts but argued it acted diligently in trying to contact Finance America and had no obligation to inform the court about interactions with Chrysler since they occurred after the redemption period had expired. The court disagreed, asserting that Best Investments’ efforts to conceal the proceedings indicated a lack of good faith and constituted fraud, which persisted before and after the redemption period. Best Investments failed to utilize available information to locate Finance America, and their deliberate concealment of the tax proceedings was deemed fraudulent. Consequently, the judgment of the circuit court of Will County was affirmed.