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H.k.h. Development v. Metropolitan S. Dist.

JUNE 5, 1968.

H.K.H. DEVELOPMENT CORP., AN ILLINOIS CORPORATION, PLAINTIFF-APPELLEE,

v.

THE METROPOLITAN SANITARY DISTRICT OF GREATER CHICAGO, A MUNICIPAL CORPORATION, ET AL., DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Cook County; the Hon. JOHN J. LUPE, Judge, presiding. Affirmed.

ALLOY, P.J.

Rehearing denied July 12, 1968.

This is an appeal from a final decree entered in an action instituted as an action for declaratory judgment to secure a judicial determination that two leases between plaintiff, H.K.H. Development Corp. (hereinafter called "H.K.H."), as Lessee, and defendant, Metropolitan Sanitary District of Greater Chicago (hereinafter called "Sanitary District"), as Lessor, were valid and binding upon the Sanitary District. The Sanitary District in 1950 leased two parcels of land for 20 years to the Thomas McQueen Company (hereinafter referred to as "McQueen lease"). In 1961, the term of the lease was extended from 20 to 60 years, with an option to renew for 49 additional years. Such lease was contemporaneously amended to permit an additional use of the land and there was an assignment to plaintiff of the lease, as amended, which the trial court found had been consented to by the Sanitary District. At the same time in 1961, the Sanitary District leased more of its acres to the plaintiff H.K.H. (hereinafter referred to as the "H.K.H. lease") for a period of 50 years, with an option for a further 49-year term. In May of 1963, the Board of Trustees of the Sanitary District passed an order canceling both leases and directing plaintiff to surrender possession of the premises.

In the course of the trial, the court, following a hearing, granted the H.K.H. motion for a temporary injunction restraining the Sanitary District from interfering with plaintiff's use of the property. This Court affirmed such order on appeal (H.K.H. Development Corp. v. Metropolitan Sanitary Dist. of Greater Chicago, 47 Ill. App.2d 46, 196 N.E.2d 494). Following such affirmance, there were extensive hearings before a Master in Chancery. The Master then filed a report finding the issues in favor of plaintiff and as against the Sanitary District, and that the attempted cancellations of the leases were a nullity, and recommending the award of a permanent injunction restraining the ouster of plaintiff. The defendant Sanitary District appeals from such decree. The trial court approved the findings and conclusions of the Master in Chancery and followed the recommendations of the Master in Chancery in entering the decree in this cause. Significant conclusions of the Master in Chancery, among others, were:

(1) that the lease between the Sanitary District and the Thomas McQueen Company was validly entered into;

(2) that the amendments to the McQueen lease were prepared and approved by attorneys and agents of the Sanitary District;

(3) that such amendments were properly approved by the Board of Trustees of the Sanitary District on February 23, 1961; and

(4) that the lease and amendments were valid and binding on the Sanitary District and plaintiff, by reason of the assignment by the McQueen Company to plaintiff of the McQueen lease and the acceptance by plaintiff H.K.H. of the assignment of said lease "as amended" and its agreement "to make all payments and to perform and keep all promises, covenants and agreements and to abide by the terms and conditions of the above described lease" (coupled with the consent of the Sanitary District to said assignment as amended).

The Master also concluded that the McQueen lease, as amended, on February 23, 1961, extending the lease term to October 31, 2010, in granting the lessee an option for an additional 49 years to October 31, 2059, did not amount to a conveyance of an interest in property beyond 99 years by the Sanitary District from the effective date of such amendments, and, therefore, was not in violation of 1961 Illinois Revised Statutes, chapter 42, § 327. That act specifically provided that the Sanitary District may lease to others for a period of time not to exceed 99 years, upon such terms as the Board of Trustees may determine. The Master also concluded that the H.K.H. use of the property conveyed by the McQueen Company was a proper use under the terms of said lease since the deposit of air-dried sludge as an incident to the manufacture of fertilizer was a permitted use under the amended use clause of said lease, and that H.K.H. was not in default in any of the terms and conditions of the McQueen lease.

The Master in Chancery also concluded that the lease between the H.K.H. Development Corp., as Lessee, and the Sanitary District, as Lessor, dated August 3, 1961, was validly entered into between the Sanitary District and the plaintiff pursuant to authority granted by the Board of Trustees on August 3, 1961. The Master based such conclusion in a large measure upon the finding that:

(a) the minutes of the regular meeting of the Board of Trustees of the Sanitary District on the date referred to, reflect an authorization to the Chairman of the Committee on Finance of the Board and the Clerk of said Board to enter into a lease with plaintiff H.K.H. for a definite period of time at a definite rental schedule for particular uses in accordance with the form of lease approved by the attorney for the Sanitary District, which form of lease was attached to the report to the Board of Trustees from the committee on real estate;

(b) the executed copy of the lease attached to the complaint was identical in all respects with those elements set forth in the Board authorization of August 3, 1961, with the sole exception of including within the use clause of the lease the following: "Distribution including a truck terminal and other transportation facilities";

(c) the authorization of August 3, 1961, stated that the form of lease would be printed in a future issue and that the certificate of notary acknowledging the signatures of the Chairman of the Finance Committee of the Board and the Clerk of the Sanitary District recited that both men had acknowledged that they signed, sealed, and delivered the instrument in their respective capacities, and caused the corporate seal of the corporation to be affixed thereto pursuant to authority of the Board; and that the acts of officers of a municipal corporation are presumed to be regular and the burden is on the party seeking to establish the invalidity of the acts to prove otherwise by a preponderance of the evidence;

(d) the lease document attached to the complaint bore the approval of a number of officials of the Sanitary District including the departmental and chief engineer, the real estate manager, the attorney and ...


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