In re Application of the County Collector
2016 IL App (3d) 150712
| Ill. App. Ct. | 2016Background
- Modla owned Peotone property; executed mortgage in 2009 in favor of Peotone Bank; they later defaulted.
- Peotone Bank failed in April 2010; FDIC became receiver and later assigned the Modla mortgage into an FDIC 2011-N1 Asset Trust (Bank of New York as trustee); assignment recorded in 2012.
- 2009 delinquent taxes were sold at tax sale in Nov. 2010 to Interstate (certificate of purchase); FDIC was not notified or consenting to that tax sale.
- Interstate obtained a tax deed (issued to assignee Galaxy) after redemption period expired; Galaxy sold the property to Varboncouer in July 2014.
- FDIC subsequently assigned the Modla mortgage to Stolat (Oct. 2014). Stolat filed a 735 ILCS 5/2-1401(f) petition in Jan. 2015 to set aside the tax deed, alleging the tax sale/tax deed was void for lack of FDIC consent under federal law.
- Trial court granted motions to dismiss by Varboncouers (2-615) and Interstate (2-619(a)(9)); appellate court affirmed, holding the tax deed was at most voidable (not void) and Stolat failed to plead/exercise due diligence required under section 2-1401.
Issues
| Issue | Plaintiff's Argument (Stolat) | Defendant's Argument (Varboncouers / Interstate) | Held |
|---|---|---|---|
| Whether tax deed was void for lack of FDIC consent under federal law | FDIC’s lack of consent rendered tax deed void ab initio, so it can be attacked anytime | Federal-law consent requirement (if any) does not divest state court subject-matter jurisdiction; at most any defect makes tax deed voidable | Court: Tax deed was at most voidable, not void; subject-matter jurisdiction unaffected |
| Whether Stolat needed to plead/establish due diligence under 2-1401 | If deed were void, due diligence not required; alternatively Stolat alleged assignment and standing | Because deed was voidable, Stolat had to meet 2-1401 requirements (including due diligence); Bank of New York had notice and did not appear | Court: Stolat failed to plead or establish due diligence; 2-1401 claim insufficient; 2-615 dismissal proper |
| Whether affirmative defenses (estoppel/waiver) bar relief under 2-619(a)(9) | Even if parties waived or are estopped, void deed can be collaterally attacked regardless of waiver | Stolat (through predecessor) failed to timely raise the alleged defect and thus is barred by equitable defenses and lack of diligence | Court: Because deed voidable, delay/forfeiture/estoppel defeat 2-1401 claim; 2-619(a)(9) dismissal proper |
| Whether Stolat adequately pleaded chain-of-title/standing and statutory grounds to set aside tax deed | Attached assignment and alleged FDIC rights; argued standing sufficient | Pleading failed to allege necessary interest in chain of title for an assignee and did not plead statutory grounds under Property Tax Code §22-45 | Court: Pleading legally insufficient; did not state grounds to vacate tax deed; dismissal affirmed |
Key Cases Cited
- People v. Castleberry, 2015 IL 116916 (Illinois Supreme Court) (subject-matter jurisdiction not divested by procedural defects)
- LVNV Funding, LLC v. Trice, 2015 IL 116129 (Illinois Supreme Court) (same principle regarding void vs. voidable orders)
- Sarkissian v. Chicago Board of Education, 201 Ill. 2d 95 (Illinois Supreme Court) (due diligence required under section 2-1401 to vacate nonvoid judgments)
- Van Meter v. Darien Park District, 207 Ill. 2d 359 (Illinois Supreme Court) (standards for review of 2-619 motions and affirmative matter)
- Board of Directors of Bloomfield Club Recreation Ass’n v. Hoffman Group, Inc., 186 Ill. 2d 419 (Illinois Supreme Court) (standards for 2-615 motions)
- In re Application of the County Treasurer & ex officio County Collector of Cook County, 386 Ill. App. 3d 906 (Ill. App. Ct.) (Hammond) (tax deed vacatur and diligence principles)