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Lewis v. Real Estate Corp.

MAY 17, 1955.

EVERETT J. LEWIS, AND BERNARD H. MANAUSA, CO-PARTNERS DOING BUSINESS AS WORLD WIDE CHINCHILLA RANCH, APPELLANTS,

v.

THE REAL ESTATE CORPORATION, AND LA SALLE NATIONAL BANK, AS TRUSTEE UNDER TRUST NO. 10778, AND INDIVIDUALLY, APPELLEES.



Appeal from the Superior Court of Cook county; the Hon. SAMUEL B. EPSTEIN, Judge, presiding. Judgment affirmed.

MR. PRESIDING JUSTICE MCCORMICK DELIVERED THE OPINION OF THE COURT.

This appeal is prayed from a judgment entered by the superior court of Cook county striking the amended complaint of the plaintiffs and entering judgment for the defendants.

The plaintiff's amended complaint (hereafter referred to as the complaint) alleged that on February 13, 1953 the defendant The Real Estate Corporation (hereafter referred to as the lessor) entered into a written lease with the plaintiffs (hereafter referred to as the lessees) for certain premises on Harlem avenue, for a term of five years, the premises to be used for the sale and boarding of chinchilla animals. A copy of the lease was attached to the complaint, together with other exhibits. The lease consisted of a printed form and a two-page typewritten addendum. Under paragraph 22 of the addendum the lessees were given the right to construct, at their own expense, an addition or additions to the main building which formed a part of the demised premises. The paragraph further provided that if, after the completion of the addition or additions by the lessees, the lessor elects to cancel the term of the lease created herein "as provided in paragraph 23," the lessor should reimburse the plaintiffs in the amount of 1/60th of the cost of construction (not to exceed $10,000) for each month of the term remaining after the delivery of possession by the lessees. Paragraph 23 of the addendum provided that if the lessor elects to sell the said premises the lease may be terminated on March 31st of each year by giving not less than nine months' written notice to the lessees, and that consideration as hereinbefore provided shall be payable to the lessees for this right.

It is further alleged that the plaintiffs went into possession under the lease, paid the rent and performed all agreements required of them thereunder; that in accordance with paragraph 22 of the addendum the lessees constructed an addition to the main building, at a cost to them of $11,310.91; that on October 20, 1953 the improvements, including the addition constructed by lessees, were destroyed by fire, and lessees were unable to and did not thereafter occupy the premises; that on November 9, 1953 the lessor served a notice on the lessees setting up that it had, in accordance with paragraph 13 of the lease, elected not to restore or rehabilitate the building so destroyed by the fire, but had elected to terminate the lease as of the date of said fire, and directed the lessees to remove any property owned or claimed by them without delay; that thereupon the lessees notified the lessor that they claimed reimbursement for 53/60ths of the cost of construction of the addition erected by them under the lease; that the lessor refused to pay the sum demanded or any part thereof. In the alternative the lessees claim for the reasonable value of the improvements erected by lessees as they existed immediately prior to the fire.

The lessor filed a motion to strike the complaint, on the ground that it lacked allegations of fact showing a liability on the part of the lessor. The court sustained the motion to strike and dismissed the suit.

The lessees' theory on appeal is that under the terms of the lease the lessor, on its election to terminate the lease after the destruction of the buildings on the premises, became obligated to the lessees for the proportion of the cost of the buildings erected on the premises by the lessees, as provided in paragraph 22 of the addendum to the lease; or in the alternative for the reasonable value of the buildings constructed by the lessees as they existed before the fire. The lessor's theory is that the lessees had no such right under the terms of the lease and that they could not recover in the alternative because their claim was grounded on an implied contract which is nonexistent under the facts here.

The determination of the rights of the parties requires a construction of the lease. The printed lease contains the clauses ordinarily found in leases. Among other things, it provides, in paragraph 9, that "no promise of Lessor to alter, remodel, improve, repair, decorate or clean the premises or any part thereof . . . has been made by Lessor to Lessee, unless the same is contained herein or made a part hereof"; and that at the termination of the lease "by lapse of time or otherwise, Lessee shall return the premises and all equipment and fixtures therein in as good condition as when Lessee took possession, ordinary wear and tear excepted, failing which Lessor may restore the premises, equipment and fixtures to such condition and Lessee shall pay the cost thereof upon request." Paragraph 10 provides that the lessee shall not make any alterations in or additions to the premises without lessor's consent in writing, and that "all additions, hardware, non-trade fixtures and all improvements, temporary or permanent, in or upon the premises, whether placed there by Lessee or by Lessor, shall, unless Lessor requests their removal, become Lessor's property and shall remain upon the premises at the termination of this lease by lapse of time or otherwise without compensation or allowance or credit to Lessee"; and further provides that if the lessee, upon lessor's request, does not remove said additions, etc., the lessor may remove them at the cost of the lessee.

Paragraph 12 provides that "subject to the provisions of Section 13, Lessee shall, during the term, at Lessee's own expense, keep the premises in good order, condition and repair," and if the lessee does not make such repairs promptly and adequately, the lessor may make them at the cost of the lessee. Paragraph 13 provides: "If the premises or the building are made wholly untenantable by fire or other casualty, Lessor may elect (a) to terminate this lease as of the date of the fire or casualty by notice to Lessee within thirty days after that date, or (b) to repair, restore or rehabilitate the building or the premises at Lessor's expense within one hundred twenty days after Lessor is enabled to take possession of the injured premises and undertake reconstruction or repairs, in which latter event the lease shall not terminate but rent shall be abated. . . ."

At common law, in the absence of any covenant or agreement between the parties, there is no duty resting upon either the lessor or lessee to restore or replace the leased premises when destroyed by fire, and the lessee under such circumstances would still be required to pay the stipulated rent. Stow v. Russell, 36 Ill. 18, 35. It was optional with the lessor as to whether or not he would himself make repairs, and he could compel the lessee either to surrender the premises or retain them, making such repairs as he might desire. 51 C.J.S., Landlord and Tenant, Sec. 366 (d). It is also the law that where the lease contains a covenant that the lessee should make repairs, together with a covenant that the lessee should deliver up the premises in the same condition as they were at the time of letting, the lessee is bound to restore the premises in the case of destruction by fire. Ely v. Ely, 80 Ill. 532; 51 C.J.S., Landlord and Tenant, Sec. 412.

Under the lease before us the lessees had agreed both to make repairs and to deliver up the premises in the same condition as they were at the time of the letting. However, the covenant with reference to repairs (paragraph 12) is subject to the covenant with reference to what ensues in case the premises are destroyed by fire (paragraph 13), in which latter case the lessor has its option either to terminate the lease within a designated period or to restore the building within another designated period. The lease also specifically provides that the lessees have no right to make alterations or additions to the premises except as provided therein. The addendum attached to and forming a part of the lease provided in clause 22:

"The Lessees shall have the right to construct, at their own expense, an addition, or additions, to the rear and/or the front of the main building of which the demised premises form a part. . . .

"If after Lessees shall have completed said addition, or additions, and if Lessor shall elect or decide to cancel the term of lease created herein, as provided in Paragraph 23, Lessor agrees to pay Lessees one-sixtieth (1/60) of the amount representing Lessees' actual cost (as evidenced by receipted bills) for labor and material of said addition, or additions, for each and every month of the term of lease remaining after Lessees shall have given up and delivered to Lessor possession of said demised premises. . . ."

The obligation of the lessor to pay for such additions was conditioned under clause 22 that the lessees shall not at that time be in default under the lease, and it was further provided that the cost as ...


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