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Bowes v. Saks & Co.

May 27, 1968


Swygert and Fairchild, Circuit Judges and Major, Senior Circuit Judge.

Author: Per Curiam

William K. Bowes, Edwin L. Bowes, Franklin B. Bowes, Marion R. Bowes, Kathryn B. Clark, and Mary B. Diehl brought an action against Saks & Company seeking damages for breach of a clause in a lease by Saks & Company as lessee. The district judge granted summary judgment for Saks & Company. We affirm and adopt as the opinion of this court the memorandum opinion of the district judge which follows in the appendix.


This is a landlords' suit for damages against their former tenant for breach of a clause in the lease to "deliver to said lessors said demised premises in good order * * * including the restoration of said premises as near to its original condition as practical." Conceding that no restoration has been made, the lessee nonetheless moves for summary judgment, basing its claim on the peculiar but largely undisputed facts now of record. I have considered the complaint, the lease, the motion, the extended briefs of the parties, the affidavits of record and attached documents. Defendant's motion is granted.

The undisputed facts, and the disputed facts as Lessors see them, are as follows: Plaintiffs ("Lessors") owned the St. Clair building in downtown Chicago, which is located across an alley from the building of defendant, Saks & Co. ("Saks"). In a lease commencing January 1, 1946, Saks leased the fourth and fifth floors of Lessors' building. During the term of the lease, the leased premises were in the following condition, which was consistent with the expectations of the parties at the time the lease was signed: a bridge was in place across the alley, attached to Lessors' building at an opening in the building's west wall, an opening in the fifth floor existed to accommodate a staircase, and numerous partitions and doors had been removed from both the fourth and fifth floors. At the expiration of its leasehold, Saks was required by the lease to make the following repairs and restorations: removal of the bridge, restoration of the building's west wall where the bridge was connected,*fn1 and restoration of the floor partitions and doors.*fn2 It is undisputed that Saks had these obligations under the lease (and extensions of it), and that the restorations were not made. Lessors claim that this breach of the covenant to restore caused them damage, that the cost of the repairs contemplated in the lease is $115,000, that additional expenses and attorneys fees have been incurred in the attempt to enforce the lease, and that they are entitled to judgment in the amount of $150,000. Saks claims that Lessors have suffered no damage as a consequence of the failure to restore and that this is plain from the record as it now stands. The validity of Saks' argument depends on the curious history of Lessors' now completed sale of the St. Clair building.

The lease between Lessors and Saks, with its extensions, expired on April 30, 1966. Prior to the expiration, Lessors offered the building to Saks for $675,000 and Saks refused. Thereafter, in early 1966, Lessors and Saks conducted negotiations on a possible cash payment by Saks to Lessors in lieu of actual restoration. The parties discussed a $52,000 payment in exchange for a release from the covenant to restore. An appropriate agreement providing for a payment in this amount was drafted by Lessors' attorney and forwarded to Saks' attorneys.

The agreement was never signed by Saks; it is not claimed by Lessors to have become binding, nor could it be. While the negotiations were pending, Lessors put their building up for sale. A real estate sales contract, dated February 14, 1966, was delivered by Lessors, as sellers, to the purchaser on February 25, 1966, with final terms agreed upon on March 1, 1966. The sale price was $750,000; the contract said nothing about restoration of the fourth and fifth floors. The building was to change possession on May 2, 1966, two days after expiration of Saks' lease. It appears that Saks was unaware of this impending sale during the early stages of negotiations for release of the covenant to restore.

Saks claims that it was responsible for failure to consummate the agreement. Its version of the story is that when it discovered the impending sale of Lessors' building, Saks demanded the purchaser's signature on the release. Saks claims that Lessors refused to obtain the signature and that this was the reason for the end of these negotiations in failure. Lessors adamantly contend that they terminated negotiations. In support of this view they submit a letter, dated March 10, 1966, addressed to Saks from one of the Lessors representing Lessors' "Realty Company." The letter, which is a crucial document in this case, reads as follows:

"Saks & Company

611 Fifth Avenue

New York, New York


"Inasmuch as you have not seen fit to execute the agreement which our attorneys sent you expressing the terms discussed between us with respect to a cash payment by you to us, in lieu of restoring the fourth and fifth floors of the St. Clair Office Building as per your lease, and in view of the shortness of the time before the expiration of the extension of the lease and the amount of time required to restore the premises, you are hereby notified that all negotiations with respect to said cash settlement are hereby terminated.

"Please restore the premises in accordance with the terms of the lease as extended and remit your rent for the ...

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