Opinion ID: 2115096
Heading Depth: 2
Heading Rank: 2

Heading: Fraud in Sale

Text: In her appeal, Rosemary suggested that a fraud was perpetrated in the sale of the property to Moser. She directed this court's attention to Moser's access to information regarding the other contracts to purchase the property; the circumstances surrounding Moser's last minute contract to purchase the property; the lack of notice to defendants regarding Moser's contract to purchase the property; the representations made to Inland that the circuit court would approve Inland's contract to purchase the property, and that Inland's presence at the hearing was not necessary; the circuit court's denial of Inland's petition for leave to intervene; and the circuit court's refusal to reopen the bidding when presented with an offer $50,000 higher than Moser's. The majority does not give voice to, or acknowledge Rosemary's argument in any way. I am of the opinion, however, that this court has an affirmative duty to address this argument, for, if the argument is meritorious, it obviates all reasons for extending Rule 305(j) protection to this sale. From my review of the record, this case appears troubled by irregularities. Plaintiff's complaint for partition was not verified as required by section 17-101 of the Act. [5] See 735 ILCS 5/17-101 (West 1996). Plaintiff averred in November, 1995, that he and defendants held title to the property as tenants in common. In actuality, the estate did not release its interest in the property until January 31, 1997. The circuit court did not ascertain and declare the rights and interest of the parties prior to appointing a commissioner to partition the property. See 735 ILCS 5/17-105, 5/17-108 (West 1996). The circuit court did not require that the commissioner take an oath fairly and impartially to make partition of the property. See 735 ILCS 5/17-107 (West 1996). The commissioner's report did not contain an unequivocal finding that the property could not be divided. See 735 ILCS 5/17-109 (West 1996). The property was not sold at public vendue. These irregularities aside, the circuit court ordered the sale of the property as one unit. The property consisted of three parcels of land, with extensive acreage. In his report, Crowley valued the property at $4,859,000 if the three parcels were sold individually, compared to $4,500,000 if the property was sold as a unit. Parcel 1 was located a mile away from parcels 2 and 3. Thus, the sale of the property as a unit could not be justified by contiguity of the parcels. In Meeker v. Evans, 25 Ill. 283 (1861), this court observed: It would seem, that when several distinct tracts of land are ordered to be sold by the master, under a decree, it is the duty of that officer to sell each tract separately, unless it is evident that the land will be more valuable in one than in several tracts. [Citation.] It is believed that this rule is of general if not uniform application.    When several tracts of land are sold en masse, for a gross sum, on the same biddings, the presumption is, that it must have been sold for a smaller amount than they would have brought had each tract been offered separately. When offered en masse, persons of limited capital are necessarily precluded from competing at the sale. And when such a sale is made, and an objection is interposed on that ground, to its confirmation, it will be set aside; unless the evidence clearly shows that it has produced more money than it would have done had it been offered in separate parcels. Meeker, 25 Ill. at 285. See also Bowen v. Bowen, 265 Ill. 638, 640, 107 N.E. 129 (1914) (It is the duty of the master in making a sale to offer the land in parcels if the same is susceptible of division. If the master fails in the performance of his duty in this regard and the lands are thereby sold for an inadequate price the sale will be set aside upon a proper showing). The circuit court ordered the sale of the property as one unit even though the evidence showed that it would take longer to sell the property as a unit, and the property would fetch a higher price if the parcels were sold individually. This irregularity in the sale of the property, along with the others noted above, fuels concerns that the interest of defendants in the property was not protected. In Meeker, 25 Ill. at 283, this court also stated: In conducting judicial sales good faith must be observed, as well by the purchaser as by the officer, intrusted by the court and the law, to enforce its judgments and decrees, in that mode. The rights of all parties to the proceeding must be regarded and properly protected. When, by a violation of the requirements of the law, by the officer conducting a sale, or by the purchaser at the biddings, the rights of the owner are sacrificed or injuriously affected, the court will interpose, and set aside the sale, and require it to be again offered. Any fraud by the purchaser, by which competition is prevented, or any neglect of duty on the part of the officer producing that result, is regarded as sufficient grounds to order a re-sale. Meeker, 25 Ill. at 284. And, in Tibbs, this court observed: When it is considered, that titles to valuable lands can be divested by this statutory proceeding, it is essential the statute should be observed, the courts not tolerating any essential departure from it. Tibbs, 27 Ill. at 128. I could not agree more with this court's assessment that the authority to partition lands also entails a duty to protect the rights and interest of all parties to the lands. The majority does acknowledge my concerns regarding the possibility of fraud in this matter. In footnote 4 of the opinion, the majority states: The dissent also maintains that additional irregularities suggest fraud in the sale. The dissent fails to explain how this overcomes Rule 305(j) and Rosemary's failure to file a motion to stay in the appellate court. 197 Ill.2d at 527, 259 Ill.Dec. at 737, 759 N.E.2d at 517. Since the majority requests an explanation, I provide one. This court is a court of equity and justice; this court has an affirmative duty not to condone fraud. Litigants seeking the protection of this court must do equity. Likewise, under our Rule 305(j), a purchaser seeking the protection of this court must have acted in good faith in the purchase of the property. This court affords protection to bona fide purchasers at judicial sales because these purchasers rely upon the court processes and are entitled to a measure of security in their purchases. Where a sale is procured through fraud or collusion between a plaintiff and a purchaser, the purchaser is not only aware of the irregularities in the sale but is an active participant thereto. By what right does that purchaser lay claim to protection of the fraudulent sale? He has not relied upon the court processes, but upon his own actions in effectuating the purchase of the property. To afford him the protection of this court is to place a premium upon his misconduct. And what of the rights of the defendant who has been deprived of his property? It must be remembered after all that [w]hilst the law guards the rights of bona fide purchasers at judicial sales with scrupulous care, it will protect owners from being deprived of their property by proceedings unauthorized by law. Morris v. Hogle, 37 Ill. 150, 155 (1865); see also Brod v. Brod, 390 Ill. 312, 325, 61 N.E.2d 675 (1945) (While the right to partition is an absolute one, [citation] a court of equity will not permit the proceeding to be used to circumvent and avoid the established principles of law and public policy and will, in the exercise of its general, equitable jurisdiction, control the proceedings so as to protect the rights of all parties concerned.); Bydalek v. Bydalek, 396 Ill. 65, 71, 71 N.E.2d 19 (1947); Barnes v. Freed, 342 Ill. 73, 78, 173 N.E. 795 (1930) (where consideration paid for land was inadequate, purchaser at a judgment sale could retain his advantage only by showing that he acquired his title by proceedings free from fraud or irregularity). This court has long espoused the principle that a party may obtain relief, on the ground of fraud, against a void as well as a voidable judgment. Elting v. First National Bank of Biggsville, 173 Ill. 368, 391, 50 N.E. 1095 (1898), citing Nelson v. Rockwell, 14 Ill. 375 (1853). The majority eschews this principle without explaining why this court should place its imprimatur upon, and afford protection to, a sale which may be fraudulent. Explanations aside, the majority fails to notice that its approach to the fraud issue is somewhat inconsistent with the reasons it advances in support of the circuit court's judgment, and the sale pursuant thereto. The majority states: Public policy of this state supports our conclusion. Illinois law protects the integrity and finality of property sales, including judicial sales. [Citations.] Indeed, it extends this protection to purchasers who without notice at the time of the purchase buy in good faith. This finality and permanence is relied on by both purchasers and others in connection with the purchase of the property, including financial institutions, title insurers, realtors, and tenants. Absent this policy, no person would purchase real property involved in a judicial proceeding, if afterwards he incurred the hazard of losing the property due to facts unknown to him at the time of the sale.  197 Ill.2d at 528-29, 259 Ill.Dec. at 738, 759 N.E.2d at 518. (Emphases added.) Thus, the majority recognizes that Illinois law affords protection to good-faith purchasers, that is purchasers who without notice at the time of the purchase buy in good faith. Further, the majority recognizes that this court extends protection to a good-faith purchaser in order to protect the purchaser from the hazard of losing the property due to facts unknown to him at the time of the sale. However, the majority refuses to address Rosemary's contention that the sale of the property was fraudulent. Instead, the majority extends the protection of our Rule 305(j) to Moser's purchase of the property. The inconsistency could not be more apparent.