Court Opinion

ID: 9520937
Source: CourtListenerOpinion
Date Created: 2023-08-07 01:53:33.148432+00
Date Added: 2024-06-11T12:47:16.001657
License: Public Domain

Mr. Justice; Klingbiejl, dissenting: I think the judgment should be affirmed, both on principle and on the authority of Jackson Park Hospital Co. v. Courtney, 364 Ill. 497. While the State’s lien for the payment of taxes may be of a superior variety, the question here concerns its existence rather than its quality. The majority opinion is predicated upon the proposition that the corporation here is essentially the same as the trust. If such proposition cannot be supported, the case must be governed by the Hospital decision. In my opinion the proposition is not sustained by the facts. The relevant facts, briefly summarized, are as follows: Prior to 1945 the beneficial interest in the real estate was owned by the shareholders of the trust. It was subject to a pledge as security for the bondholders. Upon “reorganization” the bondholders, numbering over 4000, received a prorata distribution of the corporation stock and thus became the real owners of the property. The former owners were divested of all interest in the trust property. The 1945 decree expressly found that “such assets do not suffice to permit any distribution therefrom to the holders of the Preferred or Common Shares of Forman Realty Trust, and that no participation in such assets can properly or lawfully be accorded them.” The “alter ego” of the corporation was not the trust but the creditors of the trust. While their identities do not appear, it can hardly be assumed that they are the same individuals as its shareholders. It is true that a mere reorganization, whereby the officers and stockholders of a corporation form another one to which its assets are transferred, does not necessarily effect a change of essential identity. (But cf. Bruffett v. Great Western Railroad Co. 25 Ill. 310.) However, where the assets are transferred to a new corporation, the stock of which is distributed to former creditors in settlement of their obligations, the new corporation is separate and distinct. The rule of substantial identity has no application. (Wheeler v. Acme Harvesting Machine Co. 175 Ill. App. 69.) Such is the situation here. The bondholders were not the owners of the trust or its assets. Their interests were antagonistic to, not identical with, those of the shareholders. There being no substantial identity of organization the plaintiff corporation must be deemed to be a third party, entitled to protection as a bona fide purchaser in the absence of proof to the contrary. The public records required by law to be kept show the taxes to be paid; and the property, in my opinion, is no longer subject to the lien. Bromberg v. Kulp, 398 Ill. 449, 454-455; Jackson Park Hospital Co. v. Courtney, 364 Ill. 497.