Opinion ID: 6499440
Heading Depth: 2
Heading Rank: 2

Heading: The Legal Consequences for Ownership

Text: As noted above, we consult state law to determine the parties’ property rights for purposes of the FDCPA. Henricks, 886 F.3d at 625. The parties agree that when Krasilnikova sold the Crescent Avenue property shortly after Miller’s sentencing, she conveyed a facially unencumbered title and that title was in only her name. That title generally reﬂects legal ownership is axiomatic. See, e.g., Denlinger, 982 F.2d at 235 (explaining that “the rule everywhere in America” is that record title is the “highest evidence of ownership” (internal citation omitted)). A good illustration of the point is First Federal Savings & Loan Ass’n of Chicago v. Pogue, 389 N.E.2d 652 (Ill. App. 1979). In that case, a bank ﬁled a judgment lien on the property of a land trust against the beneﬁciary of that trust. Under Illinois law, a “beneﬁcial interest in an Illinois land trust is an interest in personal property and not a direct interest in the real estate res of the trust.” Id. at 655. The court found that since the record title of the property was in the trustee’s name, the beneﬁciary did not have any “actual ownership or record title to property … upon which a lien could be impressed.” Id.; accord, Wagemann Oil Co. v. Marathon Oil Co., 714 N.E.2d 107, 115 (Ill. App. 1999) (“To hold otherwise would be inconsistent with the body of law holding that an interest in a beneﬁcial interest does not attach to the real estate.”). This general principle would point toward a conclusion that the government is not entitled to any of the sale proceeds because Miller’s name was not listed on the title. But the problem for Krasilnikova is that the larger record shows that her claim to sole title is completely unreliable. As the district court found, Miller and Krasilnikova engaged in a 12 No. 21-2725 complex series of irregular and fraudulent transactions to conceal true ownership of the Crescent Avenue property. To rely on bare title here would ignore the actual circumstances of those transactions. As we read Illinois law, in a rare case like this one, where substantial evidence shows that the paper title cannot be trusted, Illinois courts will consider other factors to determine true ownership of the property in dispute. We draw this understanding from cases in which Illinois courts have recognized certain exceptions to the general rule that title is king. For instance, in assessing real estate taxes, the Illinois Supreme Court held that beneﬁciaries of a land trust, though not in legal title, were the owners of the property and therefore were liable for the tax. Chicago Title, 389 N.E.2d at 544 (“Revenue collection is not concerned with the ‘reﬁnements of title’; it is concerned with the realities of ownership.”). In Chicago Title, the court explained that its prior opinions “indicate[d] a clear policy of the tax statute to look beyond the mere holder of title for a determination of ownership.” Id. at 545. Courts do not ignore title in land taxation disputes. Rather: “While title may be a factor in determining ownership it is not decisive. Of far greater importance is control of the property and the right to its beneﬁts.” Id. The idea that title does not always control ownership disputes extends beyond taxes to other areas in Illinois law as well. See, e.g., IMM Acceptance Corp. v. First National Bank & Trust Co. of Evanston, 499 N.E.2d 1012, 1015 (Ill. App. 1986) (statute of frauds); Department of Conservation v. Franzen, 356 N.E.2d 1245, 1250–51 (Ill. App. 1976) (eminent domain proceedings). These cases indicate that in rare cases where substantial evidence casts paper title into doubt, Illinois courts are willing No. 21-2725 13 to look beyond paper title and to take practical approaches to resolving ownership questions. Cf. Chicago Title, 389 N.E.2d at 544 (“where the primary issue involves ownership rather than title, reliance on bare legal title would be inappropriate” (internal citation omitted)). That practical approach is especially suited to cases like this one, where the paper title does not reliably reﬂect reality. A hypothetical example borrowing facts from this appeal illustrates the need for this ﬂexibility in rare cases. Vary the facts here and assume Miller had been sentenced in 2014, when the title of the Crescent Avenue property was in the Maleckis’ names. At that time, Miller and Krasilnikova had built a new home on the property and were living there, paying property taxes, and making payments from their joint checking account on the Carrington mortgage that they had taken out in the names of the Maleckis. Suppose the government had then asserted a lien on the Crescent Avenue property to secure restitution. A court would not have held the lien invalid, letting Miller oﬀ the hook, just because the Maleckis’ names—not his—were on the title, especially without the Maleckis’ knowledge. We would not conclude that Miller had no ownership interest when he lived in and helped improve the property, made payments for mortgages and property taxes, and orchestrated irregular and fraudulent transactions so that property records would not show his ownership interest. In that rare situation, Illinois law would permit courts to look beyond title. The same is true here. We are not saying that a married couple cannot choose to arrange their aﬀairs so that they maintain separate ownership of properties, including a family residence. The problem here is that the paper title in only Krasilnikova’s name is 14 No. 21-2725 unreliable, as it stems from the series of fraudulent transactions and forged signatures described above. Accordingly, the district court did not err in consulting other facts indicating actual control and deciding to split the proceeds equally between Miller and Krasilnikova. Neither spouse exercised more control than the other. The property was the family home for both. While Krasilnikova took out some of the mortgage loans in her name, Miller facilitated the closing and/or personally guaranteed some of those transactions, sometimes even entering into mortgages and transactions in Krasilnikova’s name, supposedly without her knowledge. Payments for at least one of those mortgages, as well as property taxes, came from a joint checking account where they both deposited their paychecks. The district court considered these facts and found that neither spouse exercised more control than the other. That ﬁnding was not clearly erroneous, and the court reasonably concluded that Miller and Krasilnikova each had a one-half ownership interest in the sale proceeds. The government is therefore entitled to Miller’s one-half interest of the Crescent Avenue property sale proceeds under the restitution order. The judgment of the district court is AFFIRMED.