Lah v Chicago Title Land Trust Co (IL)

379 Ill App 3d 933, 885 NE2d 481, 319 Ill Dec 210 (1st D 2008).

Facts: Nathan Edmond tipped John Waters to a distressed property owned by Nancy Kwiatkowski, and about to be sold for delinquent taxes. Edmond and Waters agreed to take title to the property together. John Waters called Kwiatkowski with an offer to purchase, without mentioning Edmond. Before reaching an agreement, Waters redeemed the unpaid taxes on February 13, 2001, the last day of the redemption period. On March 16, 2001, when Waters and Kwiatkowski reached an agreement for sale of the property, the contract and deed were backdated to February 13 so the redemption could not be set aside for his lack of interest in the property.

Later, Mooring Tax, as a tax purchaser, brought an expungement petition on the redemption, and Waters' backdated deed was incorrectly held to be legitimate, defeating the claim.

When Edmond found out Waters had taken title without him, he quickly acquired a quitclaim deed from Kwiatkowski to a trust administered by Chicago Title Land Trust Company. (Chicago Title) for consideration of $10. The deed was dated March 16, 2001, though the trust was not created until June 26, 2002. After a series of sales, the title from the second deed passed to Valerian Simirica.

M.L. Lah, as trustee for a land trust of John Waters that took title to the property, brought an action to quiet title, and defendant Simirica, beneficiary of a trust where LaSalle Bank was trustee, also claimed title. Lah alleged that the second deed was invalid, having been conveyed to a grantee that did not exist, and that the purchasers were aware of Waters's interest. The court found that Simirica's claim to the property was based on a fraudulent deed, because the deed was granted after Kwiatkowski had transferred her interest to Waters. Thus, Simirica could only prevail if he had given actual value without notice of cloud on the title. The court found no evidence to support an actual payment of value, and also found he had knowledge of competing claims. Despite finding Waters had 'unclean hands' in the backdating of the deed and actions in pursuit of the property, it found that the events did not directly affect Simirica and so could not benefit him, and thus granted fee simple to Waters.

Holding: Affirmed in part, reversed and remanded in part. The trial court was correct that Waters's unclean hands were not directed at Simirica and so could not benefit him, but was wrong in determining that this fact forced the court to grant title to Waters. Because the court was made aware of the fraudulent deed and the wrongly-defeated expungement petition submitted by Mooring Tax, it had the power to add Mooring Tax as a party. The court may raise the failure to add necessary parties on its own accord, at any time. Given the equitable nature of the proceedings, this made addressing the rights of Mooring Tax critical, and their presence necessary. Therefore, the court acted in the following manner: (1) affirmed the circuit court's decision denying Simirica's claims to title; (2) reversed the granting of fee simple title to Waters; and (3) remanded for rehearing with the addition of Mooring Tax and any other necessary parties to produce an equitable outcome.

Opinion Year: 
By: ATG Underwriting Department | Posted on: Tue, 10/28/2008 - 9:24pm